Sesa Sterlite plans to lay off 40% Goa staff
Mar 12 2014 , Mumbai
The company plans to move the court to overturn a labour ministry order last month, restraining it from cutting jobs. Sesa Sterlite was the country’s biggest iron ore exporter until some 18 months ago, when a ban halted mining in Goa, which the company claims has left it with no option but to cut jobs.
Prasun Kumar Mukherjee, executive director for iron ore business at Sesa Sterlite, told Financial Chronicle, “We have given a lay-off notice and the labour ministry has opposed it. We will now approach the court to overturn the labour ministry order.”
Another senior official said the company had to take this difficult decision as revenues got wiped off due to the mining ban in Goa. “While costs have gone up, business has fallen drastically. In such a situation the company is not left with much option but to cut jobs,” he said. The company is trying to cut all fixed costs, the official added.
The Goa government, acting on the advice of a panel set up by the mines ministry to probe mining violations, imposed the ban in September 2012. The next month, the top court upheld the ban and even halted transportation of iron ore, on the lines of the sanctions it had imposed in Karnataka the previous year. Sesa owns mines in Karnataka too.
The two adjoining states at that time used to produce almost half of India’s total iron ore output. The ban came in at a time when the demand for iron ore was soaring because of China’s economic boom. Goa, which accounted for about half of India’s iron ore exports, lost an estimated Rs 34,940 crore in revenues because of illegal mining, the panel, headed by retired judge MV Shah, said in its report. “A separate panel appointed by SC to fix a limit on iron ore production in Goa is expected to submit its report by March 15, which will form basis for the court to decide on the status of the ban,” said RK Sharma, secretary general of the Federation of Indian Mineral Industries.
In November the top court allowed sale of about 15 million tonnes of ore that had already been excavated. Sesa Sterlite claims the prolonged closure of its mines in Goa and Karnataka has left its iron ore businesses without revenue, forcing it to use reserve cash to pay salaries and meet costs.