After the Centre's decision to privatise, RINL has notched up a profit before tax this year, after a gap of six financial years.
In the past, BRS Working President KTR has opposed the Centre's privatisation of the Vizag steel plant. (Supplied)
As the Centre positions the Rashtriya Ispat Nigam Ltd (RINL), the corporate identity of Visakhapatnam Steel Plant (VSP), on the chopping block of privatisation, the employees who are already agitated over their future, are getting ready for the final showdown.
The Centre is exploring options to invite Expressions of Interest (EoIs) for the 100 percent disinvestment of the state-run Navaratna steelmaker.
Tata Steel, JSW Steel, and Adani Group have already shown “keen interest” in RINL during pre-bid consultations held in early December by the Department of Investment and Public Asset Management (DIPAM).
To work on the transaction structure for strategic sales, the Centre held a roadshow in the last week of November, followed by another round of consultation on 2 December, attended by all major steel firms.
Thousands of VSP workers are planning a total boycott of work once the EoI is floated.
“We have already decided to go on strike as and when EoI is floated. We have planned a public meeting on 27 January, marking the completion of two years of the announcement of the RINL strategic sale. But now we have decided to advance the meeting due to the urgency of the situation,” U Ramaswamy, a member of the Centre of Indian Trade Unions (CITU), a trade union affiliated to the CPI(M), as well as the Visakha Ukku Parirakshana Porata Committee (VUPPC), told South First.
A meeting of the VUPPC — umbrella organisation of several trade unions and is spearheading the agitation launched against the privatisation of the steel plant — is also being planned to decide the future course of action in the wake of the latest developments.
Barring around 5,000 executives and officers, the remaining workforce of around 10,000, as well an estimated 14,000 contract staff, will participate in the “total work strike”.
Sources in RINL said that if the total workforce goes on strike, the steel plant will not be able to run beyond two days, and its operations will be hit hard.
The Cabinet Committee on Economic Affairs (CCEA) on 27 January, 2021, had decided to go for strategic disinvestment of RINL. The disinvestment plan was immediately opposed by the workers, trade unions, and local political parties, both Opposition and ruling, in the state.
While the valuation of RINL is expected to be completed by the end of December, reports suggest that the concerned department is working on the transaction structure of about 22,000 acres of land owned by RINL, which is a key attraction for potential bidders and has once again opened a Pandora’s box.
In July 2021, the Centre clarified that surplus land and other non-core assets of the Vizag-based steel plant will not be part of the disinvestment transaction, putting to rest the criticism from several quarters.
The clarification came after the Opposition and trade unions had contended there was a conscious attempt by the Centre to hand over the valuable RINL land to corporates and crony capitalists.
RINL workers being stopped by police from taking out their rally .(Supplied)
The Centre putting a figure to the total assets of the steelmaker had sparked a debate over the value of thousands of acres of unutilised land lying idle with RINL.
The then Union Steel Minister Dharmendra Pradhan told the Lok Sabha in March last year that the gross block of property, plant and equipment, and intangible assets of RINL were valued at ₹32,022.32 crore. He also said that the Centre’s Equity share capital in RINL as on December 2020 stood at ₹4,889.85 crore.
VSP has around 19,700 acres of unused land which is valued at a few lakh crores of rupees.
For instance, RINL expects to garner ₹1,000 crore from the sale of just a 22.19-acre land parcel located in the heart of Vizag city for which it has signed an agreement with state-run construction company NBCC.
The 19,700 acres of land may not be as valuable as the 22-acre land parcel that was put up for sale in the city, but an acre of land in and around VSP fetches anywhere between ₹1-2 crore in the open market.
Andhra Pradesh Chief Minister YS Jagan Mohan Reddy on an earlier occasion reiterated the same and also pegged the value of the unused land lying with RINL as close to ₹1 lakh crore.
In the letter written to Prime Minister Narendra Modi, in March 2021, he said, “The company (RINL) 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.”
AP Chief Minister YS Jagan Mohan Reddy. (Supplied)
The chief minister also suggested that the Centre could monetise the unused land of RINL by plotting and selling which will, in turn, help to increase the valuation of the company. He assured the state government would provide all necessary permissions for land use conversion to facilitate this intervention.
However, the Centre dismissed the offer and said that the unused land will not be a part of the disinvestment plan.
“In line with current practice on strategic disinvestment transactions, surplus land and other non-core assets in respect of RINL will be hived off so that they do not form part of disinvestment transaction,” Union Minister of State in Ministry of Finance Bhagawat Kishan Rao Karad told Rajya Sabha on July 2021.
RINL, with an annual capacity of 7.3 million tonnes, has recently borrowed from banks to take up plant modernisation and capacity expansion.
Demanding that the Centre roll back its call, thousands of RINL’s Visakhapatnam Steel Plant (VSP) employees have been protesting since then.
After the Centre’s decision to privatise, RINL has notched up a profit before tax this year, 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 Amortization) of ₹3,469 crore, recording a growth of 148 percent to the previous year.
The company has also earned a cash profit of ₹1,923 crore in the financial year 2021-22.
After being reported to Board for Industrial and Financial Reconstruction (BIFR) as a sick company, VSP performed well between 2002 and 2015, earning profits and positive net worth.
From 2015 onwards, 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 ₹4893.35 crore in 2015-16 to ₹1, 618.06 crore.
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.
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