The Cabinet Committee on Economic Affairs on 27 January, 2021 decided to go for 100 percent strategic disinvestment of RINL.
The Visakhapatnam Steel Plant. (Official website)
The BRS, which is looking to make inroads into Andhra Pradesh, appears to have found a footing there, thanks to the Central government’s decision to privatise the Visakhapatnam-based state-run steelmaker Rashtriya Ispat Nigam Ltd (RINL).
The BRS, it is learnt, is also getting ready to hold talks on the future course of action with the workers’ unions of the Visakhapatnam Steel Plant (VSP), which have been agitating to bring pressure to resist privatisation of the Public Sector Undertaking (PSU).
The Central government’s Cabinet Committee on Economic Affairs (CCEA) on 27 January, 2021, decided to go for 100 percent strategic disinvestment of RINL.
The plan was immediately opposed by the workers, trade unions, and local political parties — both Opposition and ruling — in the state.
In an open letter to the Central government on Sunday, BRS working president KT Rama Rao detailed what he called “evil plans” of the Central government to hand over the VSP to private players, the reasons behind the steel plant incurring losses, and the ways in which the plant could be revived.
The Telangana minister said that as part of the conspiracy to privatise the steel plant, the VSP would be pushed into losses and the crisis would be used as an excuse to hand it over to crony corporate companies.
KTR said that the Central government did not allocate special iron ore mines to the steel plant. Due to this, he said, the steel plant was forced to spend up to 60 percent of its production cost on raw materials.
On the other hand, the cost of raw materials in private companies’ production was less than 40 percent, as iron ore, coal, and other mines were allotted to them. As a result, he said, the VSP was not able to operate at its full capacity of 7.3 MTPA.
KTR said that the enterprise was in distress as coking coal had to be imported, and iron raw materials needed for steel production were being bought at market rate from NMDC.
“Due to this, more than 50 percent of production had to be stopped for a year. All of this is part of a conspiracy to push the Vizag Steel Plant into losses and use it as an excuse to privatize the steel plant. Modi has written off loans worth ₹12.5 lakh crore for his corporate friends. Why is he not showing the same generosity on the Vizag steel plant?” KTR asked.
Stating that an Expression of Interest (EoI) notification was issued in the garb of mobilising funds for working capital and raw materials, KTR said that the Modi government was indirectly attempting to hand over the PSU to private entities through the notification.
He also demanded that the Centre immediately cancel the EoI notification.
KTR in his letter also laid out a detailed plan to revive the PSU.
He said that Steel Authority of India Limited (SAIL) had already announced its expansion plans with a cost of around ₹1 lakh crore.
He said that the company could be merged with the VSP, which has several advantages when compared to selling the steel plant to private companies at a low price.
“This will contribute towards SAIL’s expansion goals. If the company moves in this direction, then an ecosystem can be created to fulfil the longstanding demand for a steel factory in Bayyaram, Telangana and a steel plant in Kadapa,” said KTR
He said that if the Centre extended support, the enterprise could work at full capacity, which would help it generate profits.
Maintaining that the Centre should stop conspiring to privatise a PSU which has ₹1.5 lakh crore worth of assets, KTR demanded that the Modi government should extend ₹5,000 crore financial assistance to the steel plant.
He recalled that when the VSP faced a financial crisis earlier, then prime ministers PV Narasimha Rao and Atal Bihari Vajpayee bailed out the PSU by extending financial support.
He also suggested the Central government purchase steel from the VSP for large-scale infrastructure projects in the country and pay the money in advance.
“The VSP is allowed a loan monetisation of up to ₹25,000 crore only. However, private companies having the same amount of assets as it are allowed to raise loans up to ₹70,000-80,000 crore.” KTR said.
Meanwhile, the BRS’ Andhra Pradesh unit chief Thota Chandrashekar said the party would soon hold a meeting with VSP workers and chalk out an action plan to resist the Centre’s move to privatise the steel plant.
After the Centre’s decision to privatise, RINL notched a profit before tax in its latest results — after a gap of six financial years.
In the financial year (FY) 2021-22, RINL achieved a turnover of ₹28,215 crore — its highest since inception — marking an impressive growth of 57 percent over the previous year.
During the year, the company achieved an EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortisation — of ₹3,469 crore, recording a growth of 148 percent from the previous year.
The company also earned a cash profit of ₹1,923 crore in the financial year 2021-22.
After being reported to the Board for Industrial and Financial Reconstruction (BIFR) as a sick company, the VSP performed well between 2002 and 2015, earning profits and achieving a positive net worth.
Though the turnover of RINL went up from ₹10,059.34 crore in 2015-16 to ₹15,819.24 crore in 2019-20, its cash reserves depleted from ₹4,893.35 crore in 2015-16 to ₹1, 618.06 crore in 2019-20.
However, RINL suffered losses of ₹1,420.64 crore in FY 2015-16, ₹1,263.16 crore in 2016-17, and ₹1,369.01 crore in 2017-18.
In 2019-20 fiscal, the company had a loss of ₹3,910.17 crore.
Apr 26, 2024
Apr 26, 2024
Apr 25, 2024
Apr 25, 2024
Apr 25, 2024
Apr 25, 2024
