Sesa Sterlite Ltd, the country’s biggest iron ore exporter until a ban halted its mines in Goa 18 months ago, plans to fire 40% of its workforce in the state to cope with spiraling costs and negligible business.
The unit of Vedanta Resources, controlled by billionaire Anil Agarwal, is aiming to eliminate 1,000 of its 2,500 workers, said Prasun Kumar Mukherjee, executive director for its iron ore business. Sesa plans to petition the court to overturn a labor ministry order last month restraining the company from cutting the jobs, he said.
“We’re looking critically at all fixed costs,” Mukherjee said in an interview at Sesa’s Goa headquarters. “So far, we haven’t cut a single penny from staff salaries, but now we have to take this difficult decision.”
Illegal mining in the state was the result of a surge in global prices and like “a vehicle without brakes running down a slope,” Goa CM Manohar Parrikar said last month. Still, the estimated loss was exaggerated and a realistic figure “could be about 10% of the estimates,” he said.
Sesa Sterlite shares fell as much as 3.2% to R178 and traded at Rs 178.75 as of 11:54 a.m. in Mumbai. The stock has declined almost 12% this year, compared with a 3.4% gain in the benchmark S&P BSE Sensex.
A separate panel appointed by the Supreme Court to set a limit on the production of ore in Goa is expected to submit its report by March 15. The court, which in November allowed sales of about 15 million tonne of ore that had already been excavated, will decide on the ban after reading the report.
The prolonged closure of mines in Goa and Karnataka, where Sesa also owns quarries, has left the company’s iron ore unit without revenue, forcing it to use reserve cash to pay salaries and other costs.
The company, which had 4,000 workers before the ban, has removed 1,000 temporary staff and cut 50 managerial jobs, Mukherjee said. Not a single engineer has been hired in two years and most foreign travel has been halted, he said.
The measures are saving as much as r5 crore a month, Mukherjee said. That supplements the dividend income from Sesa’s holding in Cairn India, operator of the nation’s biggest onshore oil deposit, he said. Vedanta acquired Cairn India for $8.67 billion in 2011.
Meanwhile, Sesa workers have not only lost the scope for working extra shifts, their performance