By Nantoo Banerjee
There is little business or commercial reason behind the government’s move to dismantle the age-old Kolkata-based raw materials division (RMD) of public sector Steel Authority of India Limited (SAIL). The move appears to be totally political and engineered by the national government. The division has done very well over the last three decades. In fact, it needs to be strengthened by linking to SAIL’s coking coal import. The country imports about 56 million tonnes of metallurgical (coking) coal, worth around Rs. 72,000 crore. SAIL is the largest single importer. Surprisingly, this is handled by SAIL’s commercial office in Delhi and not its RMD in Kolkata. Like Tata Steel, SAIL should also have its commercial office in Kolkata and not in Delhi. The SAIL board is unlikely to take such a crucial decision as shutting down the decades old RMD in Kolkata and distribute its function to its two steel plants, Rourkela and Bokaro, without the government support and provocation.
Importantly, SAIL must explain why does it want to deprive Indian Iron and Durgapur Steel, both based in Bengal, of their captive iron ore mines if RMD mines are awarded to Rourkela and Bokaro plants. This is totally unjustified. In the past, all SAIL plants had captive iron ore mines. In fact, the century-old Indian Iron is the only SAIL plant to boast its own coal and iron ore mines. Its iron ore mines at Chiria, Gua and Mandharpur are known to be the country’s best. The ore deposits in Chiria constituting nearly two billion tonnes are the second largest such deposits in the world after those in Russia’s Urals. Apart from this, Indian Iron had three collieries, at Chasnala, Jitpur and Ramnagar. The deposits in the mines are sufficient not only to meet the steel plant’s own requirement, but also that of other steel plants in the country. It will be unfortunate if Indian Iron is cheated of its priceless mineral assets that made some of the world’s top steel makers interested in the company in the 1980s and ‘90s. In fact, during the late 1980s, when V. Krishnamurthy was SAIL’s chairman cum CEO, Japan’s Nippon Steel was keen to take over Indian Iron. Why did the political dispensation in Delhi fail to grab the opportunity, then? Honestly, the present government or the SAIL board should have no right to rewrite Indian Iron’s history by depriving the plant of its valuable mineral assets.
The political government at the centre or states is impermanent. In contrast, state-owned enterprises (SOEs) are expected to continue to live and prosper until they are sold or deliberately shut down. The SOEs in China, which helped the communist country emerge as the world’s second largest economic power, are the best example in this regard. The periodical top level changes in the Chinese Communist Party (CCP) did not alter the organisational character of its SOEs. Why does the India government always fiddle with the commercial structure of its SOEs? Unfortunately, the reasons have always been political. Often, they are influenced by the centre-state political rift. That would probably explain why over the years SOEs in Bengal, governed by political parties opposed to those at the centre in Delhi, were at pains to grow. This would explain why the Durgapur-based alloy steel plant (ASP) was made to feed raw materials to over 1,000 km away Salem steel plant in Tamil Nadu and why Durgapur Steel, having the country’s first major wheel and axle plant, was not allowed to grow while the government decided to set up another wheel and axle plant in Karnataka. There are many such examples.
All the SAIL’s five integrated steel plants, using blast furnace technology, are located in Eastern India, the major source of their key raw materials such as iron ore, coking coal, dolomite and limestone. The SAIL’s oldest steel plant, Indian Iron (Iisco), formerly belonging to Burn & Co., was the only one with its own iron ore and coal mines. Rourkela Steel (RSP) is based in Odisha, Bhilai Steel (BSP) in Chhattisgarh and Bokaro Steel in Jharkhand. The BSP, RSP and DSP were originally part of India’s premier SOE, Hindustan Steel Limited (HSL), the earlier avatar of SAIL. HSL was based in Ranchi, which was close to all its steel plants and raw material supply sources. It operated out of Ranchi between 1959 and 1973. What made the government to shift the management of these public sector units close to its political headquarters in Delhi remains a mystery as much as its latest bid to shift RMD function out of Kolkata.
Under an act of Parliament, SAIL was incorporated in January, 1973. And, for no business or commercial reason, it was headquartered in Delhi, the nation’s political capital, located several hundred kilometres away from the steel plants and their raw material sources. If at all, SAIL should have been headquartered in Ranchi. The political bosses in Delhi seemed to have wanted to directly control SAIL, its large capital expenditure, massive expansion plans and large foreign and domestic procurement contracts for reasons best known to themselves. Nowhere in the world, a country’s political capital is used to deliberately host corporate headquarters of SOEs, irrespective of their key operational locations. For unknown reasons, Delhi hosts corporate offices of such high profile SOEs, or PSEs, as IOC, NTPC, SAIL, GAIL, BHEL, ONGC (registered at Dehradun), Container Corporation, Engineers India, NBCC, Oil India (registered at Duliajan, Assam) among several others.
Compare Delhi with Bonn, the capital of West Germany between 1949 and 1990. Bonn was probably the smallest capital city among the large economies across the world. Germany is Europe’s biggest economy. And, Bonn, with a human population of only three lakhs, hosted no large industrial empire. This was despite the fact Bonn is close to the Ruhr region, Germany’s biggest metropolitan area with a population of well over 11 million. Other than being West Germany’s capital till 1990, Bonn is happy to be known as a university city and birthplace of Beethoven. In fact, it would be right if Delhi directs all SOEs to relocate themselves close to their key operational centres before it disturbs the age-old status of SAIL’s RMD in Kolkata. (IPA Service)