Hindustan Steelworks Construction Limited (HSCL) was established in 1964 under the ministry of steel to mobilise indigenous capability for putting up integrated steel plants in the country.
The company later diversified into other areas such as power plants, mining projects, coal washery and irrigation projects — including dams and barrages — among others. Its chairman and MD, Malay Chatterjee, spoke to HT. Excerpts:
HSCL was making losses and had turned sick. What were the reasons for that?
After 1970, development of two factors resulted in severe setback to the operations of the company. First, there was a sudden increase in workforce from 4,100 to 26,537 between 1970 and 1979. This was due to the crisis created when a large number of public Sector and private companies — engaged by Bokaro Steel Ltd during its construction — failed and left work sites, leaving behind their workforce. HSCL had to compulsorily take over the leftover jobs, along with the workforce, under a government directive, in order to complete the work within the stipulated time. The other major factor for the company’s decline was lack of substantial activities in the steel sector during recession, after completion of the first phase. The jobs awarded to HSCL by the steel plants were not enough to sustain the expenditure towards employees’ salaries and wages. Another factor that contributed to the company’s downfall is the major losses suffered during the work undertaken in Libya. Hence, the company began to incur continuous losses from 1978-79 onward. As on March 31, 1999, the accumulated loss stood at R1,383.28 crore.
How did the turnaround come about?
During 1999-2000, the government sanctioned financial assistance and exemptions, which included waiver of outstanding interest on a government loan amounting to R957.81 crore. Despite an acute recession, specifically in the steel industry, immediately after implementation of the restructuring package, the company started generating operational profits from 2002-03. This has been possible due to a variety of factors, including constant follow-up with clients for securing orders, diversification in the infrastructure sector and creating reserve for securing working capital from banks, among others.
What plans does the company have for diversification?
At present, about 80% of the company’s business comes from the infrastructure sector and only 20% from the steel sector. HSCL is all set for implementation of low-cost housing projects in Sri Lanka. The company is also diversifying into the realty sector. Land has been acquired by HSCL at Rajarhat in Kolkata and Mohali in Chandigarh.
Can you elaborate on the steps taken to build capacities?
We have signed an MoU with Uzinexport SA, Romania, for execution of contracts in steel and infrastructure sector in India. We have entered into another MoU with PowerCem Technologies of Netherlands for introduction of cost-effective products for making roads in India.