Pay cut move leaves VSP staff in a fix

This measure (pay cut) will do nothing to save the company’s expenditure - Ch Narsinga Rao, honorary chairman, Visakha Ukku Andhrula Hakku, tells Bizz Buzz

Drastic Measures

♦ RINL facing crippling debt due to costly expansion

♦ Executives and unions protesting the pay cuts

♦ RINL owes over Rs2,400 cr to employees

♦ It includes PF arrears, other unpaid benefits

Visakhapatnam: Crisis-hit Rashtriya Ispat Nigam Ltd (RINL) management’s decision to impose a pay cut has left the employees fuming. The company reported a loss of over Rs1,000 crore in FY22, which increased to more than Rs3,000 crore in FY23.

RINL, the second-largest state-owned steel manufacturer in India after SAIL, is struggling under heavy loan liabilities, primarily due to capital expenditure on expanding its capacity to 7.3 million tonnes (MT) per annum. The lack of captive mines has further escalated production costs, leaving the company financially crippled.

HD Kumaraswamy, Union Minister for Steel, and Srinivasa Varma, Minister of State (MoS), who is elected as MP from Andhra Pradesh, immediately after taking charge, visited RINL, the corporate entity of Visakhapatnam Steel Plant (VSP), popularly known as Vizag Steel. Both the ministers promised employees to announce a favourable decision after consulting Prime Minister Narendra Modi. Further, they also assured for safeguarding the interests of the steel plant, which was set up after historical agitation ‘Visakha Ukku Andhrula Hakku’ in the 1970s. Following a recent circular mandating a compulsory pay cut after the management’s appeal for voluntary salary reductions failed, RINL executives and unions are on a warpath now.

“This measure will do nothing to save the company’s expenditure,” Visakha Ukku Andhrula Hakku honorary chairman Ch Narsinga Rao told Bizz Buzz.

A HR circular stated that there will be a 12 per cent cut in perks and allowances for board level executives including the Directors and the CMD and 6 per cent on executives up to E-9 level affecting 4,100 executives. The circular stated that the cut will be effective from wages due for August 2024 to March 2025.

A large number of officers under the leadership of the Steel Executives’ Association (SEA) submitted a petition to Chief General Manager (Works) U Sridhar, demanding withdrawal of the circular issued by the steel management on August 20, reducing perks by six per cent from the salaries of the officers.

SEA president and general secretary Katam SS Chandra Rao and KVD Prasad said that already after the 2007 wage agreement, the officers have a large amount of pension fund arrears, unfairly cut incentive arrears in the PRP payment period in 2011, and the arrears of the wage agreement to be made from 2017. Salary lost due to non-grant of promotions, provident fund and gratuity arrears which are statutory payments for the last five months, electricity charges which are highest in the country for the last 14 years, employee family benefit scheme to be given to the families of deceased officers, payments, leave encashment arrears to retired officers for the last four months, arrears to be deducted from the salary of officers and deposited in the trip fund, post-retired medical scheme payments of retired officers, all together the steel plant’s management owed more than Rs2,400 crore.

It has been said that this money has been unfairly used for working capital and other payments for the last 10 years despite the fact that the employees are cooperating in view of the financial condition of the plan. Now, cutting 6 per cent from the take home salary without at least consulting them is unfair, SEA bemoaned.