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11. Mr. K.S.R. Chari after exhaustive study of the problems of KGF drew some conclusions and made some recommendations as found at paras 15.1 to 15.32. The main recommendations made by him is that the policy adopted by the Government of India in compensating the BGML for the gold made over to it ever since the formation of the company seems to have been directed towards achieving just one objective, to keep the mines going and it is not clear as to why the Government should have been fighting shy of giving the BGML the market price for the gold rights from the start. A positive and more helpful gold pricing policy by the Government could largely have prevented BGML from getting into the present unfortunate position it is in today. It has resulted in the BGML being portrayed as a losing concern which really it has not been so far but is rapidly becoming one. By 31-3-1985, the Government had built up a surplus of Rs. 154.88 crores accruing to it through gold made over by BGML since its inception. The company deserves to be given market price for gold produced by it with immediate effect to enable it to function as a commercial venture. He recommended that Government could treat BGML as the canalising agency and advance necessary FE from its reserves to import 50 to 60 tons of gold annually for sale in the open market at the ruling prices, at a predetermined rate of 10/20 gins, per occasion of wedding etc., and in the process not only will the financial losses incurred by the BGML be wiped out but at the same time, smuggling of gold with all its risks and uncertainties will become a highly uneconomic venture and should get quickly eliminated. Problems would not have become so serious today if only strict control over manpower had been exercised during the past 7 to 8 years. Some 3,500 to 4,000 persons can be considered to be surplus to the present level of the company's operation. A Scheme of voluntary retirement may, however, be drawn up and efforts made to reduce manpower by about 1,000. Having regard to the financial position of the BGML, funds for implementation of this scheme should come from the Government in the form of an outright grant. The vacant posts of wholetime Director for Finance or Personnel may not be filled presently. Some reduction may be necessary in the strength of officers through reorganisation, specially, in the context of shrinkage of mining operations. It should be possible to find outlets for the surplus officers in some of the other public sector companies under the Ministry. Incentive Scheme for reducing the time for sloping operations deserves to be implemented. The future of the Champion mine is greatly dependent on the success of the proposed mechanisation schemes. There are complaints of security lapses. These need be looked into. A senior Police Officer, on deputation from the Karnataka State Government may head the security and vigilance wings. The services of a mining specialist having good knowledge and experience of mines with comparable gco-mining conditions as in South Africa, should have been obtained on priority, as he could have offered expert advice on some of the mechanisation schemes under con-

"Although the Kolar mines have witnessed, over this long period of history, closure of some units and opening new ones, this is perhaps the first time that the closure of the Mysore Mine cannot be compensated by any other prospect being opened within the area".

12. The Department Related Parliamentary Standing Committee on Industry submitted its seventh report on 30-3-1994 after considering the concrete proposals for development and exploration of mining at Kolar made by one S. Natarajan, former Director (Technical), the documents furnished by the Ministry of Mines, the oral evidence of the representatives of the Ministry, workers' unions management of Bharat Gold Mines. An impression was given to the Parliamentary Committee that faulty process of extraction and pilferage of the finished gold are the two important factors responsible for escalation of cost of production. The machines and other equipments used in extraction of gold ore are either defective or have become outdated in terms of their viability. The mining technology is at present is in dire need of modernisation. BGML Authorities have submitted a rehabilitation proposal worth Rs. 107.83 crores to the Industrial Credit and Investment Corporation of India Limited, the operating agency appointed by BIFR and a copy of the report has been sent to Central Government and suggestion was made to Government of India to consider it sympathetically. Insofar as security and pilferage in the BGML premises, Chari Committee and also the Parliamentary Committee noticed the lapse with much anguish. It was submitted before the Parliamentary Committee that leakage/pilferage of gold has significantly resulted into high cost of production. The poor security arrangements have given sufficient room for pilferage. At present there is no Security Officer to head Security network, Frisking of workers and officers at the site has been quite casual as the security norms are not adhered to strictly. Security personnel have been put to all sorts of problems in performance of their duties. Not to talk of any incentives to them they are even denied the basic working conditions in the company. The Committee also gathered that a large number of goldsmiths and pawnbrokers are at present operating in and around gold field areas. The present erection of six feet wall and the level of fencing around the compound is far from required level of security. There is ample scope for an individual to cross over these fences for their nasty activities. The Security personnel have not been provided proper arms and ammunitions to deal with criminal elements. At present it is estimated that the pilferage of gold is about 30 crores per annum. The Management does not contest the Court cases of pilferages. However, the Management seems to be pretending that it is not aware of these hand in glove malpractices as at no point they have conceded the possibility of pilferage. The tailing deposits also have some gold in it which can be extracted if a CIP is established. No arrangements have been made either to process or dispose of the same. The company has not permitted to sell gold in the open market without any pre-condition, but there are cases of irregularity in terms of commission paid to the agents in the open market. The Parliamentary Committee incidentally considered the social problem prevailing in the KGF Municipal area, the major part of which, is occupied by the workers of BGML. The sub-committee noticed that the workers are living in small houses in in human conditions. They are getting electricity for not more than one hour a day that too at a very low voltage. Similar is the case of potable water. Sanitary conditions are also not satisfactory. Their localities are stinking. The workers have no other options but to live there with their families. The management is charging rentals for these small houses, electricity and water from the low paid workers whereas the officers of the company are perhaps enjoying rent free accommodation. The people living in the area do not know any other profession except mining because they are in this field generation after generation and when these people are not given jobs in KGF they remain unemployed and loiter around in the hope of getting job. The unemployed youth of the area may join hands with these antisocials. The scavenging by scavengers is still in existence in KGF despite its abolition at the national level. The sub-committee made certain recommendations for revival of the company. The company has been referred to BIFR. Now it cannot take any action for the revival without the prior permission of BIFR and therefore, recommended that the reference by BGML, Kolar to BIFR be revoked. The Government may either make available 41 crores of rupees as budgetary support or soft loan to the company or stand as a guarantor to enable the company to get loans from bunks and financial institutions. The Management can raise the requisite funds for its revival by selling its surplus land at the existing market rates. The security network of the company should be streamlined and every effort should be made to prevent pilferage of gold produced by the company. Frisking be made compulsory for everyone coming out of the premises, where gold is produced irrespective of his status. Technology from countries like South Africa, Australia etc., can be explored who can help in modernising the existing techniques of BGML on profit sharing basis. If proper investments are made in this company and new era of hope and dedication is generated the company can run smoothly for the next 50 to 60 years. But there must be a will on the part of the Government to run this company. The State Electricity Board should be apprised of the gravity of the situation and persuaded to reduce the power tariff to reduce the burden of BGML. Similarly, the State Government is charging royalty from BGML without extending any facility. The State can also be persuaded to forgo charging royalty from BGML. The above-mentioned steps recorded by the Committee would create possibility of revival by BGML and certainly it will prove to be a national asset.

19. These contentions canvassed for consideration can only be appreciated in the light of the statutory provisions of the I.D. Act, the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA" in short). Initially the SICA was enacted to govern the private industries, the provisions of which are extended to Government owned factories. SICA is an Act to make in public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The Tiwari Committee appointed by the Government in 1981 was set up to examine in detail (a) difficulties faced by the banks and financial institutions in the rehabilitation of the sick industrial undertakings; (b) legal problems in the rehabilitation of the units. One of the major problems was the blocking up of the funds. both of the banks and the financial institutions. The Committee besides identifying the causes of sickness gave a model Bill and the Act is passed with modified provisions by taking all the major recommendations.

25. This is not a case where there is no possibility of revival at all though reserves in Nandidurg mines were depleting. The NAAL and other agencies opined that reserves at Chiraguppa mines and other neighboring mines which could be excavated for profits.

26. It is distressing to note from the reports submitted by various Committees that criminal unlawful activities became rampant in the area. There was rampant pilferage of gold from the premises of the BGML. The Parliamentary Committee and Chari's Committee reports indicate that the management were helpless and often colluded with the workers in not prosecuting the guilty. The century old township of KGF breath lot of problems not only inhuman disease but social as well. Over a lakh of people for over generation are residing in the municipal area of BGML. People are residing there for over generations. It is stated that unemployed youths and others converted themselves into criminal acts and that the workers of the company were partly responsible for pilferage and also for other criminal activities. While the workers blame the management for the present state of affairs, the workers are equally responsible for the same. Mr. Chari noticed in his report that 400 goldsmiths have opened their shops in KGF only with the assistance of the workers and other criminal elements. These goldsmiths could not survive in that area without connivance and assistance of workers. The unions have not diverted their attention to this problem created by their members. In fact Mr. Chari in his report suggested long back that the management should have tightened their security which they have not done, various loopholes were noticed in the security system of BGML. This is only one of the defects pointed out by the committees apart from the extra expenditure incurred by the management as such. No effort has been made by the management to curb unlawful expenditure and also cut down the working force, dismantle old machinery and no serious attempt has ever been made to infuse new life to this century old gold mines.