The contentious takeover of SAIL-Steel Complex Limited in Kerala | Explained Premium

NCLT order to hand over SAIL-SCL Kerala Limited in Kerala to COSPL sparks protests; employees fear job security amid conspiracy theories.

The story so far: The National Company Law Tribunal’s (NCLT) order to hand over SAIL-SCL Kerala Limited (SSKL) at Cheruvannur in Kozhikode district in Kerala to Chhattisgarh Outsourcing Services Private Limited (COSPL), as part of insolvency proceedings, has triggered protests from the Kerala government as well as employees of the company. A blame game is now on over the public sector undertaking (PSU) being allegedly run down and finally sold.

The SSKL, the only mini-steel plant in Kerala, was founded in 1969 as a joint venture of the Kerala State Industrial Development Corporation and a private entrepreneur. The company mainly manufactured TMT steel bars used for construction and with a production capacity of 55,000 tons per annum and it had made substantial profits in the mid-1980s. However, it faced turbulent times later and in an attempt to save it, the Kerala government entered into a partnership with the Steel Authority of India Limited (SAIL) in 2010.

Matters got out of hand after the SSKL procured a loan of ₹45 crore from Canara Bank in 2011 for the construction of a state-of-the-art re-rolling mill. The company could not clear the debt that accrued to ₹104 crore by 2023. As debt mounted and unable to manage the expenses, the company partially ceased operations in 2014, and has been completely out of business since December 2016.

Upon Canara Bank’s request, the NCLT appointed Anish Aggarwal as the Receiver/ Resolution Professional in March 2023 to smoothen the insolvency proceedings. The NCLT-Kochi Bench order to hand over the company to COSPL, a Raipur-based business services company, for ₹30 crore came in June 2024. However, the employees of SSKL fought the takeover tooth and nail and stopped the Receiver and a representative of COSPL from entering the premises of the company twice so far. Meanwhile, the Government of Kerala approached the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT’s order, citing that it had not heard the government before coming up with the order and also that the SSKL cannot have the right to hand over the land acquired by the State without its permission. Even while the NCLAT served an interim injunction over the NCLT order, COSPL obtained an order from the Kerala High Court directing the police to offer protection to the company’s officials to enter the SSKL premises. Their second attempt to enter the premises in the first week of July also turned futile due to stiff resistance from the employees under the aegis of various trade unions.

Meanwhile, the Kerala High Court cancelled its earlier order offering police protection to the officials on grounds that COSPL’s right to enter the premises was contentious. In the most recent order, the Kerala High Court ordered to implead the Receiver in the case against the takeover filed by the State government.

Conspiracy theory

Ever since the NCLT order came, the employees and the trade unions have been alleging a conspiracy in it and the involvement of the land mafia. “The company is worth over ₹300 crore and they are selling it for a mere ₹30 crore. It does not even cover the debt owed to Canara Bank. The NCLT did not give the State government a chance to present its case or settle the issue amicably. COSPL does not have any experience in this field. It is a business services company. Hence we suspect something shady in this deal,” K. Shaji, convenor of the Steel Complex Employees Coordination Committee, told The Hindu.