The Indian government has commenced the process for closure of Visvesvaraya Iron and Steel Plant (VISP), a wholly-owned subsidiary of Steel Authority of India Limited (SAIL), due to high costs, its low-volume production and lack of captive iron ore, minister of steel Jyotirditya Scindia told the Indian parliament on Tuesday, February 28.
Listing the causes of losses and of the ultimate forced closure of VISP, he said that high cost and low volume are due to obsolete technology, high cost of raw material, the highly competitive alloy steel market, and the lack of an operational captive iron ore mine at the plant site in Karnataka state.
The Indian government in 2016 had initially approved strategic disinvestment in VISP, but the short-listed bidders expressed their inability to participate in the transaction, forcing the annulment of the expression of interest (EoI), the minister said.
Meanwhile, 267 employees on the regular rolls of the company are continuing with protests against the closure of the steel mill. Trade union representatives have alleged that the government is not transparent in citing reasons for the closure of VISP, pointing out that in 2019 the state government of Karnataka had reserved 150 acres of a captive iron ore mine for the plant but holding company SAIL did not proceed to initiate the process of formal acquisition of the land.