After driving about 280 km from Bengaluru on Bengaluru-Honnavar Road, a hoarding -- “Welcome to Steel Town” -- greets travellers. Bhadravathi, the town on the banks of the river Bhadra, has earned the title of “Steel Town” because of Visvesvaraya Iron and Steel Limited, a 100-year-old industry set up by the Mysuru rulers.
Visionary ruler Nalwadi Krishnaraja Wadiyar and the Dewan of Mysore State Sir M. Visvesvaraya were instrumental in setting up the industry that brought name and fame to the town. Though it started as a small unit with limited capacity in 1923, over the years it increased its production and offered jobs to thousands of people for several decades. The industry, now merged with Steel Authority of India Limited (SAIL), is facing the same crisis that it faced in its initial years.
The Mysore rulers understood the need for an industry for iron production in the early years of the 20th century. By then, Tata Iron and Steel had been set up in Jamshedpur. In those days, coal was the primary fuel for iron production. Considering the non-availability of fuel in the nearby area, the State decided to go for the use of wood charcoal obtained from the neighbouring forests. This was the practice followed in the United States of America and Sweden at the time. The State took the services of USA-based engineering consultants Messrs. Perin and Marshall to design the unit. The same consultant had designed the Tata unit at Jamshedpur.
World War hampers pace
Due to the First World War that began in 1914, the construction work could not take off as planned. Finally, it started in 1918, and it was estimated to be completed in 18 months. The state had a tie-up with Tata Sons Ltd. for the supply of machinery. The construction took five years. By then, the price of iron had come down globally. Many, including the consultant engineer, suggested the rulers stop the construction until the prices normalised. Visvesvaraya had resigned over the differences with the rulers on constituting the Miller Committee.
The Maharaja did not give up his plan, despite the sudden fall of iron prices in the global market. He felt M. Visvesvaraya was the right person to head the unit and bring it on the right path. He sent his Dewan to meet Visvesvaraya in Mumbai and persuaded him to take over the unit and set things right. As he also genuinely felt the need for such an industry in Mysuru State, he agreed to head the board of management. He was given a free hand to make decisions.
Sir MV’s words
Visvesvaraya was at the helm of affairs for six years, and that laid a strong foundation for the company. Within a short period, the industry flourished. In his farewell address on September 24, 1929, Visvesvaraya said, “During the last six years, the operations have been reduced to a system, the cost of collection and transport of raw materials brought down to the level originally estimated, the output maintained at a satisfactory level, and the cost of production reduced by more than 50%. A local staff has been trained for the various positions, and methods of modern administration have been introduced on the plant. The works have gradually been made to pay their way.” He has recorded this statement in his autobiography, Memories of My Working Life.
Visvesvaraya’s leadership in building the plant was well appreciated by Mr. Perin, the expert who designed the project. During his visit to the plant in 1927, he was highly impressed with the work done. He conveyed his opinion to Visvesvaraya and the Maharaja as well. The Maharaja was happy, particularly for the reason that Visvesvaraya had been able to dispense with all American labour and ensure the plant was entirely managed by the local staff. “It is an achievement of which the State should be proud of,”, said Maharaja in his congratulatory message to Visvesvaraya on February 12, 1927.
The growth story
The saga continued on a similar path for several decades. Mr. Visvesvaraya visited the unit in January, 1950, thirty years after he left the office. In his speech, Visvesvaraya noted how big the unit had grown financially. “By 1949, the gross value of products had risen to ₹1.69 crores and the net returns to ₹13.1 lakhs, or 6%, on the capital”. Further, he said, “With the expansion and development in several stages of progress, the capital value will increase to nearly ₹5 crore, and in the next two or three years’ time, they are likely to yield a net income annual to the government of the order of half a crore,” he said. The company has retained the office where he worked, and a museum has been set up in his memory. The museum has rare photos, along with a model of the entire campus.
The unit expanded its activities, gradually increasing the work force as well. It had captive mines at Kemmannugundi, Bandigudda, and Balekallgudda. The alloys and special steels produced in the plant had high demand in different fields. For marketing the products, branch offices were opened in Bengaluru, Kolkata, Chennai, Delhi, Mumbai, Nagpur, and Pune. The company fulfilled the requirements of Indian Railways and the defence sector, among other clients. By March 2003, as many as 3,034 people were working at the plant. The plant collaborated with steel industries in the UK, USA, Austria, Australia, and Norway. Whenever the plant expanded its production and added new facilities, the employees were trained abroad on operating the advanced machinery.
The plant is spread over 3.8 sqkm in Bhadrathi. The production activities included a blast furnace, a steel-making shop, rolling mills, a forge plant, a heat treatment shop, and a finishing shop, among other facilities. The employees had a hospital on the campus and schools for their children. When the production was at its peak and the company was doing well financially, it ran 11 schools, including at the mining points. The plant has the installed capacity to produce 2.16 lakh tonnes of hot metal and 98,280 tonnes of alloys and special steels.
The tough phase
In recent decades, the company has gone through a tough phase. Due to the tough competition from the private sector, the public sector unit could not survive the fall in income. Besides that, there were hardly any efforts to modernise the production. The company was declared a subsidiary of Steel Authority of India Limited in 1989, and later it was merged with SAIL (1998). With that, the company lost its independent status. The company used to take orders on its own.
As of September 1, 2023, there are only 250 permanent employees, including 50 executives. As many as 1,278 people have been working on a contract basis. However, L.Praveen Kumar, General Manager (HR and PR), maintained that the productivity had improved after the SAIL took over. “With the minimum employees, the company is doing well. Apart from production, regular maintenance, security operations and administration of the plant are going on. We have a 40-bed hospital for the staff,” he said. The officer refused to comment on the proposed strategic disinvestment of the plant.
The existing employees have often alleged that the SAIL did not give attention to reviving the plant. In August 2016, the NITI Ayog recommended the strategic disinvestment of VISP. The recommendation was approved by the Cabinet Committee of Economic Affairs and the SAIL Board, necessitating that the Department of Investment and Public Asset Management invited the Expression of Interest on July 4, 2019. However, in October 2022, due to insufficient bidder interest, the Union Government annulled the transaction for strategic disinvestment in the plant.
Earlier this year, the SAIL Board decided to close the plant. This was communicated to the employees on January 18, the day when they were preparing for VISP’s founder’s day. Since then, the employees have been opposing the move. The permanent employees under the leadership of J. Jagadish, and contract workers under the leadership of H.G. Suresh, staged protests. Leaders of political parties extended support for their protests ahead of the assembly elections.
Politics around plant
Shivamogga Lok Sabha member B.Y. Raghavendra recently announced that the SAIL board has decided to resume production activity in VISP, backtracking from its earlier decision to close the unit. As a result, mill operations have resumed. However, the Ministry of Steel has not cleared the plant from strategic disinvestment. Faggan Singh Kulaste, Minister of State for Steel, in a reply to an unstarred question in parliament, reiterated the disinvestment plan. Hence, the workers are worried about the future of the VISL.
“The VISL now needs a ruler like Nalwadi Krishnaraja Wadiyar and an administrator like Visvesvaraya to look after the management so that it is revived back to its past glory,” opined a permanent employee who wished not to be quoted.
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