The AP Chambers of Commerce and Industry Association (APCCIA) resolved in a roundtable meeting that the Central government should allot captive iron mines to Visakhapatnam Steel Plant (VSP) to bring down its cost of production, permit swapping of high-cost debt with low-cost debt and conversion of short-term and long-term loans into equity and give 10% equity to the public if the situation warranted.
APCCIA president K.V.S. Prakash Rao and general secretary P. Bhaskar Rao said people were emotionally attached to VSP as it was established after years of agitation, which resulted in the loss of 32 lives, and that it is the only shore-based steel plant in the country that is located in a well-connected city and has around 20,000 acres of prime urban land that is worth a few lakh crores of rupees. Besides, there are many ancillary units dependent on VSP. The plant earned profits from 2002 to 2014 and had become a ‘Navaratna’ company.
The high cost of production caused by the absence of captive mines, the high debt servicing burden and an unfavourable global steel cycle contributed to the losses reported by VSP of late. The entire steel industry is faced with fluctuating demand and currently almost all the steel plants in India are running in losses. VSP should not be privatised when there is scope for achieving a turnaround, the APCCIA office-bearers maintained.
