Latest Tragedy at Indian Steel Plant Again Raises Red Flags Regarding Safety Standards

Loss-making balance sheets and cost-cutting in — or lax — oversight of health and safety can go hand in hand; they are often examples of poor management.

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The aforementioned also sometimes go hand in hand with state ownership – in both the developed and developing world.

So maybe it should come as little surprise that, according to a Financial Times report, there has been yet another fatal accident at a loss-making, state-owned Indian steel plant.

For foreign buyers of Indian steel, the red flag is loss-making, state-owned manufacturers also have some of the worse reputations of poor quality.

This latest incident is the announcement involving the death of nine workers and injury of 14 following a fire during maintenance at Steel Authority of India Ltd’s (SAIL) Bhilai plant early last week. The Bhilai plant, in the central state of Chhattisgarh, is the largest operation among SAIL’s plants, and is to be expanded from an annual output of 3.7 million to 6.6 million metric tons.

The Financial Times reports Bhilai had already been the site of one of India’s worst recent industrial accidents in 2014, when six people were killed and more than 30 injured by a gas leak. Two years before that, 19 people were killed in an explosion at the Visakhapatnam Steel Plant, another state-controlled company.

Although the private sector in India is making significant strides in terms of both quality, safety and good governance, the state sector continues to lag behind.

Last year, the British Safety Council estimated 48,000 people die annually in occupational accidents in India, often as a result of poor regulatory oversight, the Financial Times reports.

SAIL is not alone among Indian state enterprises with respect to safety issues — but being one the largest makes it also one of the worst.

The firm reported a net loss of Rs 2.8 billion ($37 million) for the year ending in March, its third consecutive annual loss. However, the Financial Times reports accidents have hit state-run companies in other sectors, notably power utility NTPC, where 43 people died from an explosion of a boiler in northern Uttar Pradesh state last year.

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State enterprises are big employers in India. As such, the government is slow to implement rapid change. Those jobs are clearly not without their risks and the lack of reform continues to not only affect profitability, safety and product quality.

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