The loss-making salem steel plant of SAIL will not be fully divested, but only a majority stake of upto 51% will go in the hands of the private sector, steel minister Mr. Chaudhary Birender Singh said in Lok Sabha on Monday.
“The Salem Steel Plant is incurring losses for the last five or six years. Therefore, the Ministry took a decision that there should be strategic disinvestment as far as the Salem Plant is concerned,” the minister said.
High power costs is one of the major reasons for the unit running into losses. The minister said that efforts were made to get power at concessional rates from the state of Tamil Nadu went in vain. Power accounted for 46% of the losses, he said.
“Ultimately, the strategic disinvestment decision, particularly I would say this is a Cabinet decision, has already been taken where if somebody comes forward, 51% or more than 50% of the shares would be disinvested; he would have management and also run the plant but 49% of the shares would remain with the Salem Plant as it is already there,” he said.
Salem Steel Plant has a total stainless steel capacity of 3.39 lakh tonnes per annum. The unit has incurred a loss of INR 1,855 crore in the last five years – from 2011 to 2015-16. SAIL has invested INR 2,200 crore in the plant.
The Salem Steel Plant has a total of 4,000 acres of land of which 2,900 acres is for the plant, 415 acres is for the township and the rest of 1,549 acres of land has been earmarked for further installations.
Though there has been stiff opposition from the state government and the company officials; legal advisors, surveyors and asset valuers have been deployed to make a detailed analysis of the plant. A decision on the future of the plant would be taken after receiving their reports.
The Centre government has already accorded ‘in-principle’ approval for strategic disinvestment of three units of Steel Authority of India Ltd. (SAIL) viz, Visveswaraya Iron and Steel Plant, Bhadravati, Salem Steel Plant, Tamil Nadu and Alloy Steel Plant, Durgapur. These three units of SAIL have been consistently making losses.
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