On a day of intense protests in Visakhapatnam, Chief Minister Y.S. Jagan Mohan Reddy on Tuesday dashed off a letter to Prime Minister Narendra Modi to give an appointment to explain all the options to revive and put Rashtriya Ispat Nigam Limited (Visakhapatnam Steel Plant), Visakhapatnam, back on track.
The development comes a day after Union Finance Minister Nirmala Sitharaman in her reply in the Lok Sabha said the Centre would go ahead with the plan of 100% disinvestment of Government of India’s equity in RINL along with RINL’s stake in subsidiaries/joint ventures through strategic disinvestment by way of privatisation.
Mr. Jagan said that he would lead an all-party delegation, including the representatives of trade unions, to represent directly the concerns being expressed by the people of Andhra Pradesh, employees and various stakeholders.
“I assure you that the Andhra Pradesh Government will closely work with the Government of India under your able leadership in making this happen, and together we can revive the plant for unlocking greater value to society and in particular to the people of Andhra Pradesh,” Mr. Jagan said in the letter.
While making references to an earlier letter written in February, Mr. Jagan said he had mentioned the problems being faced by RINL, Visakhapatnam, and suggested various solutions to revive the same and requested to reconsider the decision of 100% strategic disinvestment.
“RINL, the corporate entity of Visakhapatnam Steel Plant, is a Navratna Company. It is the largest public sector industrial unit in the State creating employment opportunities for close to around 20,000 people directly and many other indirect employment opportunities in Vishakhapatnam,” Mr. Jagan said.
Stating that the VSP was India's first shore-based integrated steel plant and a producer of long steel products catering to the requirements of the construction, infrastructure, manufacturing and automobile sectors, the Chief Minister said the plant was realised only after many sacrifices by the people.
While drawing attention to the fact that the plant had a good performance between 2002 to 2015 earning profits with positive net worth, Mr. Jagan said the plant had pragmatically turned-around in 2002 after being reported to BIFR as a sick company.
The company had around 19,700 acres of land currently and the valuation of the lands alone could exceed ₹1lakh crore due to the location of the plant in the urban area and rapidly expanding urban sprawl. RINL currently had a capacity of 7.3 million tonnes and had taken up plant modernisation and capacity expansion recently which made the plant to borrow loans from banks to take up the expansion. Owing to the unfavourable steel cycle globally, the company was making losses since 2014-15 and was finding it difficult to service the debt. One of the major structural issue that also lead to high cost of production was the absence of captive mine thereby affecting the profitability.
“Due to all these factors, I can emphatically say that the plant will again become a profitable venture given some support from the Government of India instead of taking the disinvestment route by implementing some turnaround measures such as allotting captive iron ore mines to bring down the input costs, swapping high cost debt with low cost debt, converting debt into equity through equity conversion and monetization of vacant land. I request you to consider the following measures for revival of RINL Visakhapatnam,” Mr. Jagan said in the letter.
