Chief Minister Y. S. Jagan Mohan Reddy has 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 (RINL), Visakhapatnam back on track.
Mr. Reddy said that he would bring 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 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 the society and in particular to the people of Andhra Pradesh,” said Mr. Reddy.
While making references to an earlier letter written in February, Mr. Jagan Mohan Reddy said that he has mentioned the problems being faced by RINLand suggested various solutions to revive the same and requested to reconsider the decision of 100% strategic disinvestment.
But in the meantime, Union Minister for Finance, Nirmala Sitharaman in her reply in the Lok Sabha on March 8 stated that the central government would go ahead with the plan of 100% disinvestment of Government of India`s equity in RINL along with RINL’s stake in subsidiaries or joint ventures through strategic disinvestment by way of privatisation.
“Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), is a Navratna Company under the Ministry of Steel, Government of India. It is the largest public sector industrial unit in the state creating employment opportunities for close to around 20000 people directly and many other indirect employment opportunities in the city of Vishakhapatnam,” said Mr. Reddy.
Stating that the VSP is 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 CM said that the plant was realized only after many sacrifices by our people.
While drawing attention to the fact that the plant had a good performance between 2002 to 2015 earning profits with positive net worth, the CM said that the plant has pragmatically turned-around in 2002 after being reported to BIFR as a sick company.
The company has around 19,700 acres of land currently and the valuation of these lands alone could exceed one lakh crore rupees due to the location of the plant in the urban area and rapidly expanding urban sprawl. RINL currently has a capacity of 7.3 million tonnes and has 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 leads to high cost of production is 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,” said Mr.Reddy.
