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Vizag Steel heading for disinvestment?
Visakhapatnam Steel Plant (VSP) of Rashtriya Ispat Nigam Ltd (RINL) is making all efforts to stage a turnaround. The Department of Public Enterprises (DPE) has already served an ultimatum to all the loss-making PSUs to enhance performance in a time-bound plan.
Visakhapatnam: Visakhapatnam Steel Plant (VSP) of Rashtriya Ispat Nigam Ltd (RINL) is making all efforts to stage a turnaround. The Department of Public Enterprises (DPE) has already served an ultimatum to all the loss-making PSUs to enhance performance in a time-bound plan. The DPE also gave enough indication that if the public-sector units failed to make a turnaround, disinvestment process would be put into motion with government keeping the controlling stakes.
Dr Madhukar Gupta, Additional Secretary from the Ministry of Heavy Industries and Department of Public Enterprises, has refused to divulge the time frame on disinvestment, but admitted that there would be disinvestment if the companies failed to revive. “We will deal with the loss-making units case by case for disinvestment,” Dr Gupta told this correspondent. The disinvestment will be unit-wise and later they will confederate, a local source said.
VSP is the only shore-based steel factory in India and one among the top-10 loss-making PSUs in the country. Rashtriya Ispat Nigam Ltd suffered a net loss of Rs1,421 crore even though its sales turnover rose five per cent in the 2015-16 fiscal. And it had a turnover of Rs 12,781 cr for 2016-17 financial year. Expansion and interest on loans need not be construed as part of losses, the sources said.
Sources at the RINL said during the last four to five years, the company invested over Rs 20,000 crore in the expansion plan that led the factory to augment capacity to 7.1 million tonne. A senior official at RINL said that the steel unit would bounce back to profits from next fiscal with expansion and modernization beginning to deliver results. However, this fiscal it will end up in losses.
“Though the company doesn’t have captive mines, the costs would be cut down drastically. It will use pulverised coal injection to all three blast furnaces saving around Rs 300-400 crore annually,” he added. The RINlL after incurring a loss of Rs75 crore in 2001-2002 financial year, bounced back and made a net profit of Rs 521 crore in the very next year.
The Union Cabinet has approved the National Steel Policy 2017 to create a globally competitive steel industry in India and set a target for 104 million tonne by 2017, 300 million tonne steel-making capacity and 160 kgs per capita steel consumption by 2030. With BSNL leading the pack, the other PSUs, which incurred losses over 80 percent include Sail, Air India, Hindustan Photo Films Manufacturing Ltd, MTNL, Hindustan Cables Ltd and BHEL.
By KMP Patnaik
