People's Democracy

DISINVESTMENT IN HZL

Cong & BJP Helping 'Poor' Vedanta

Tide over its Debt Problems

Ch Narsinga Rao

THE country’s first prime minister Jawaharlal Nehru had famously described public sector industries as the “new temples of modern India”. But his present successors from the same party are hell bent on demolishing these “temples” by handing them over to private corporates. The BJP, which subscribes to the same  economic philosophy, is hand in glove with the Congress regarding these efforts. Many key PSUs like IDPL, HMT, IFC have been closed down to facilitate greater profits for the competing private players. The recent illegal closure of the Vishakapatnam unit of Hindustan Zinc Ltd in Andhra Pradesh is one more such instance.

Zinc is an important mineral with significant uses not only industrially but also in biology and public health. The largest company extracting this mineral in India, Hindustan Zinc Ltd, was incorporated in January 1966 as a public sector company after the erstwhile Metal Corporation of India Ltd was nationalised through the Metal Corporation of India (Acquisition of Undertaking) Act, 1966. Its headquarters was based in Udaipur district of Rajasthan where this mineral is available in abundance. With access to imports of raw mineral and also export of finished products, a Zinc smelter unit was established in Visakhapatnam in 1976. This company made giant strides as a public sector unit, remaining a profitable PSU. Its profits in the year 2012-13 stood at a whopping Rs 6899 crores.

In 1999, during the NDA regime, the government had divested about 26 per cent of its equity in HZL to Anil Agarwal's Sterlite Industries, infamous for getting undue benefits through BALCO disinvestment. Although the then opposition Congress made some feeble voice of protest, it was only the CITU that fought bitterly against the disinvestment process on the streets while the CPI(M) members fought inside the parliament. The Congress-led UPA I government was restrained from further disnvestments by the Left parties on whose crucial support the government survived. But the UPA-II regime had no such compulsions and the result has been further reduction of government stake in HZL. Today, Anil Agarwal's Vedanta group controls 64.92 per cent stake in Hindustan Zinc Ltd. The government's holding has been reduced to 29.5 per cent. Again, the present opposition BJP is silently supporting the Congress government's moves to unduly benefit Anil Agarwal at the expense of government exchequer.

WHY IS VEDANTA

SO DESPERATE?

Recently Vedanta chairman Anil Agarwal held a press conference in Delhi on 24th October 2013 and chided the Manmohan Singh government for not speedily deciding on the route to divest the remaining 29.5 per cent government stake in HZL. As per media reports Agarwal has said “the government is unnecessarily spending so much time” in this regard and that it “needs to take a decision on the issue at the earliest.”

The finance ministry headed by P Chidambaram is also equally keen to hand over the remaining stake to Vedanta by saying that it would raise Rs 15,000 crore this fiscal. But the parent ministry of HZL – the union mining ministry –  has put a spoke by stating that since this company has been incorporated through an Act of parliament, divesting the entire equity would require parliament's approval. According to a report on NDTV Profit channel's website dated 25th October 2013, “the draft cabinet note on this issue prepared by the mining ministry has cited a Supreme Court order of 2003, which had stayed disinvestment of HPCL and BPCL, saying that they were formed through a statute and required parliament approval and that the same is applicable on Hindustan Zinc also.” Moreover, the CBI has re-opened the 1999 disinvestment of HZL to look into any illegalities committed then. The main issue is that then also parliament approval was not sought. In this background, the mining ministry is justified in taking the stance of seeking parliament approval. But it appears that stance has resulted in Agarwal's angry reaction in his press conference.

But why is Mr Agarwal in such a desperate haste to acquire the remaining 29.5 per cent government stake in HZL? The following excerpts from a report published in Business Standard daily on 10th September 2013 would give the answer:

“For the London-headquartered Vedanta group, acquisition of the government’s stake in  Hindustan Zinc Ltd (HZL) is important, as it will give the Anil Agarwal-led company access to HZL’s cash reserves to pay the loans taken to acquire Cairn India...

“As the government is still holding 29.5 per cent stake in HZL, the group was unable to access the Rs 21,000 crore of cash and investments. Bankers say after buying the government’s stake, Sesa Sterlite will be able to dip into the cash reserves of HZL to help it repay Cairn’s loans of almost $3.5 billion, which are coming up for repayment in the next three years.

“The prospect of its three large projects under Vedanta Aluminium — the $2.92-billion aluminum smelter, $1.57-billion  alumina refinery, and $0.15-billion debottlenecking project — remaining bleak primarily due to unavailability of bauxite is what’s worrying analysts.”

So, faced with bleak prospects in other projects, Agarwal desperately wants to lay hands over the Rs 21,000 crore cash reserves of HZL to overcome his debt repayment problems, And Manmohan Singh and Co. are burning midnight oil to overcome the “parliament approval” barrier and help 'poor' Mr Agarwal! At the time of writing this, the government, bypassing the parliament, has decided to go for open auction route to hand over its 29.5 per cent stake. Not that the government would have had any problem in parliament with the “opposition” BJP also equally, if not more, keen to help Mr Agarwal.

ILLEGAL CLOSURE

OF VIZAG UNIT

That the privatisation of public sector units is detrimental to the interests of not only workers but to the economy and nation as a whole has once again been proved by what happened to the Vizag unit of HZL. Vedanta acquired HZL that had four zinc smelters and refineries across the country as also 7 zinc lead mines – all worth around Rs 10,000 crore then – for a paltry Rs 445 crore.  With just 26 per cent stake, it acquired operational control over the company. And using the assets of the company, the Vedanta group expanded its businesses rapidly. They upped their stake to 64.92 per cent and now aim to make it 100 per cent.

The Vizag smelter unit, apart from the facility had land assets of 365 acres and a large residential complex for its employees who numbered 1697 permanent workers, 140 officers and 1300 contract workers at the time of Sterlite's takeover. However immediately after taking over Sterlite started cutting down on workforce strength. The production at the time of takeover was 1.85 lakh tonnes and it was taken to 7.68 lakh tonnes this year. But all of a sudden on 07th February 2013, production was halted. The company cited lack of sufficient raw mineral as a reason. But after two months, it stated that it can no longer continue operations here because of power and environmental issues.

The contract workers were turned away from the gates of the company after collecting their passes. In the name of 'special voluntary retirement scheme' for officers and permanent workers, it forcefully relieved them of their duties. Some were transferred to company's other units flouting all norms and rules.  It stopped paying salaries to workers since February 2013.

The real intention behind this sudden closure of Vizag unit is the 'goldmine' of real estate the company is sitting on. The staff quarters area and the 365 acres of land is worth hundreds of crores of rupees and falls between the two ports of Gangavaram and Visakhapatnam. Vedanta has bought two berths each in both the ports. It intends to use HZL land for docking purposes and developing real estate property. Workers and production for the sake of economy are minor 'hurdles' to Vedanta group, given its proximity to both the main bourgeois parties.

Yet, dramas were enacted by Congress leaders over the closure. Union minister D Purandeshwari, who represents Visakhapatnam Lok Sabha constituency intervened and threatened to hold a dharna in front of the company gate against the closure. The local MLA held many meetings with the affected workers promising to get the unit re-opened. They made workers shuttle between Hyderabad and Delhi. INTUC leaders believed the words of their party leaders and refrained from launching a big agitation. Finally on 31st July this year the state labour minister brokered a deal whereby the families living in the staff quarters would be paid Rs 1 lakh each and they should vacate within a month. The workers stood cheated! INTUC is the recognised union in all the four zinc units in the country. Using this, the management could successfully close the unit silently without following any laid down procedure. Also, without any resistance from the workers!

The workers of Vizag unit of HZL saw how laws would not come to their aid when the governments stand by the managements side. On 28th April in a meeting with the state labour commissioner, it was recorded in minutes that stoppage of production by the company is illegal. The commissioner issued notices against the company under section 23 (c) of Industrial Disputes Act 1947. But nothing came of these actions. The company's real estate plans prevailed.

There are however instances where the working class under correct leadership could prevail over sinister attempts at privatisation, for example the united struggle of Neyveli Lignite Corporation workers in Tamilnadu made the central and state governments halt their privatisation efforts. Similarly efforts were made to divest 10 per cent equity of Vizag Steel Plant in 2011. But the workers fought and stopped it.  The efforts to privatise Coal India were also successfully thwarted by the unions collectively. The workers must also realise that both Congress and the BJP are always keen to serve the interests of Anil Agarwal and ilk rather than the masses. The only way to resist this is by launching united, powerful working class struggles.