Visakhapatnam-based state-run Navaratna steelmaker Rashtriya Ispat Nigam Ltd (RINL), which the central government once decided to privatise, has shown positive profit before tax after six financial years.
The Cabinet Committee of Economic Affairs (CCEA) in January gave in-principle approval for 100 percent strategic disinvestment of the Central government’s shareholding in RINL, along with management control, by way of privatisation.
This triggered an uproar in several quarters.
Demanding that the Centre roll back its call, thousands of RINL’s Visakhapatnam Steel Plant (VSP) employees have been protesting since then.
RINL Chairman and Managing Director Atul Bhatt, at the 40th Annual General Meeting (AGM) held on Wednesday, 28 September, revealed the financial details of the Public Sector Undertaking (PSU).
During the financial year (FY) 2021-22, RINL achieved its highest turnover since inception of ₹28,215 crore, notching up an impressive growth of 57 percent over the previous year.
Also, the PSU showed a positive profit before tax after six financial years. During the year, the company achieved an EBITDA of ₹3,469 crore, recording a growth of 148 percent over the previous year.
The company has also earned a cash profit of ₹1,923 crore in the financial year 2021-22.
The company’s best-ever performance was registered during the year in all major production areas with growth over the previous year, in spite of curtailed operations in Q4 on account of the coking coal crisis.
The hot metal production of 5.77 Mt achieved during the year is the highest for any single unit of a public sector steel plant in the country.
In red for five years
Though the turnover of RINL has gone up in the past five years from ₹10,059.34 crore during 2015-16 to ₹15,819.24 crore during 2019-20, its cash reserves were in the negative to the tune of ₹1, 618.06 crore.
The cash reserves of RINL were put at ₹4,983.35 crore in 2015-16.
However, RINL suffered losses of ₹1,420.64 crore in FY 2015-16, ₹1,263.16 crore in 2016-17, and R₹1,369.01 crore in 2017-18. In the 2019-20 fiscal, the company had a loss of ₹3,910.17 crore.
VSP had performed well between 2002 and 2015, earning profits and boasting of a positive net worth. The plant turned around in 2002 after being reported to BIFR as a sick company.
CM Jagan’s suggestions for RINL
On his part, Chief Minister YS Jagan Mohan Reddy had written to Prime Minister Narendra Modi opposing the disinvestment move and suggested a few alternatives to run the Vizag-based steel plant.
The government also passed a unanimous resolution against the disinvestment in the state Assembly and sent it to the Centre.
To make RINL turn around financially, Jagan suggested that short-term and long-term loans could be converted into equity, easing the repayment pressures and interest burden.
The high-cost debt, to the tune of ₹22,000 crore, is being serviced at interest rates as high as 14 percent.
“Conversion of these loans into equity by the banks so as to remove the interest burden totally and listing RINL on the stock exchange, giving the banks exit option through the stock exchange route through the general public, may also be explored,” Jagan said in his letter to Modi.