Cash-strapped RINL asks staff to take pay cut

It’ll in no way pep up the morale of the employees, rather such suicidal steps will send wrong signals at a time when the company needs collective efforts to put the company back on the track by putting pressure on the Centre to withdraw privatisation decision and announce a revival package by giving working capital grant of Rs3,000 crore - VSWU president KSN Rao and general secretary D Adinarayana tell Bizz Buzz

Tightening Purse Strings:

• VSP has 13k employees
• Staff given 2 options-giving up or deferring payments
• Unions say it’ll instigate labour unrest
• RINL invested Rs16,300 cr in expansion, repairs of blast furnaces
• However, net worth nosedived from Rs13,659 cr in FY12 to Rs391 cr in FY23

Visakhapatnam: The cash-strapped Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), has courted a controversy by issuing an ‘appeal’ asking the employees to sacrifice part of their wages and allowances in view of critical financial position being encountered by the company. VSP has been listed in 2021 for 100 per cent privatisation by the Centre.

The circular issued vide HR/24 dated July 8, 2024, and signed by the General Manager (HR)-Establishment and Rules, has left the 13,000-odd employees seething with anger. It is being circulated in various circles as a ‘voluntary pay cut’ circular.

The appeal copy, which is available with Bizz Buzz, stated: “As you all know, RINL is passing through tough times and is in a precarious financial position. In order to navigate the current economic and financial challenges, it is essential that we come together as a team to support our organisation from your salary or to defer a part of your salary for a specific period. This gesture will help us support our company’s operation and ensure the continued growth and survival of RINL.” The circular with the subject ‘Join hands to help our organisation in the need of the hour’ said: “Your support in this endeavour will be greatly appreciated and will undoubtedly contribute to our continued success. If you are willing to contribute, please indicate your willingness for the amount equivalent to by choosing to either giving up or defer any one or more” of the following: Percentage of contribution/lump sum amount of basic pay, perks and allowances, energy allowances, canteen subsidy, night shift allowance, LTE in case of non-executives, spouse allowance. The employees are advised to give the option of giving up or deferring the receipt of amounts.

The company made it very clear that the contribution is purely voluntary and no matter what the amount, it will make a valuable impact. The appeal has been outrightly rejected by Visakha Steel Workers’ Union (VSWU)--the recognised union. A senior executive of RINL, while declining to comment due to apparent reasons, described the move as ‘counter-productive.’

“It will in no way pep up the morale of the employees, rather such suicidal steps will send wrong signals at a time when the company needs collective efforts to put the company back on the track by putting pressure on the Centre to withdraw privatisation decision and announce a revival package by giving working capital grant of Rs3,000 crore, VSWU president KSN Rao and general secretary D Adinarayana told Bizz Buzz.

Visakha Steel Employees Congress president Neetukonda Ramachandra Rao alleged that “there is a conspiracy to instigate labour unrest and described the ‘appeal’ as a retrogade step.”

RINL has an annual capacity to produce 7.3 million tonnes, but the company for a long period has cut down the production due to a variety of reasons like raw material shortage and working capital crunch. Production was hit hard for 36 days due to strike by the workers at Adani Gangavaram Port. The company sold its forged wheel plant at Rae Bareli to the Railways for Rs1,800 crore, but effectively it could get just Rs50 crore due to old loans. The land sale in the city fetched only Rs50 crore in the first phase, which was later stopped due to legal hurdles. Though Tata International has given a soft loan of Rs1,800 crore through a Letter of Credit facility to procure raw materials, the company has so far got Rs800 crore. NMDC’s promise to give Rs1,500 crore in exchange of land lease of 1,150 acres for setting up a pelletisation plant has not yet materialised. Employees say the MoU with Jindal Steel & Power Ltd (JSPL) to run one of the three blast furnaces is not benefiting RINL

RINL has invested around Rs16,300 crore for expansion and capital repairs of blast furnaces. The net worth, it is alleged, has nosedived from Rs13,659 crore in FY12 to Rs391 crore in FY23.