YS Jagan seeks PM Narendra Modi appointment on disinvestment of RINL
Chief Minister YS Jagan Mohan Reddy in a letter to Prime Minister Narendra Modi on Tuesday appealed for an appointment to personally convey the opinion of all political parties and other stakeholders regarding the privatisation of Visakha steel plant.
Amaravati: Chief Minister YS Jagan Mohan Reddy in a letter to Prime Minister Narendra Modi on Tuesday appealed for an appointment to personally convey the opinion of all political parties and other stakeholders regarding the privatisation of Visakha steel plant.
The chief minister recalled that in a letter on February 6th he had clearly mentioned the problems being faced by Rashtriya Ispat Nigam Limited (RINL), Visakhapatnam suggested various solutions to revive the same and requested to reconsider the decision of 100 percent strategic disinvestment. He said that he had also addressed the union Minister for steel offering suggestions to revive RINL and make it financially strong.
He said that the announcement of Union Minister for Finance, Nirmala Sitharaman in her reply in the Lok Sabha on March 8 stated that the Govt of India would go ahead with the plan of 100 percent disinvestment of Govt of India`s equity in RINL along with RINL`s stake in subsidiaries / joint ventures through strategic disinvestment by way of privatisation is a matter of great concern for the people of Andhra Pradesh, Employees of RINL and other stakeholders.
The chief minister said that he would like to bring to the prime minister's kind notice once again the importance of reviving RINL, its association with the sentiments of the people of Andhra Pradesh and various options available to revive the plant and its sustainability in future.
"As you are aware Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), is a Navratna Company under the Ministry of Steel, Govt. of India. It is the largest public sector industrial unit in the state creating employment opportunities for close to around 20000 people directly and many other indirect employment opportunities in the city of Vishakhapatnam. It is India's first shore-based integrated Steel Plant and a producer of long steel products catering to the requirements of the Construction, Infrastructure, Manufacturing & Automobile sectors. This plant was realised only after many sacrifices by our people. The people of my state rallied for the Visakhapatnam Steel Plant in which 32 people have laid down their lives. On 17th April 1970, the then Prime Minister of India, announced the Government's decision to establish a steel plant at Visakhapatnam culminating the decade-long public agitation "Visakha Ukku-Andhrula Hakku" in the undivided Andhra Pradesh," Jagan said.
He exuded confidence that the plant will again become a profitable venture given some support from the Government of India instead of taking the disinvestment route by implementing some turnaround measures such as allotting captive iron ore mines to bring down the input costs, swapping high cost debt with low cost debt, converting debt into equity through equity conversion and monetisation of vacant land.
He requested the prime minister to consider the following measures for revival of RINL Visakhapatnam.
a. Continuing Operations to achieve turn around
As with all the sectors of economy, the steel sector is also seeing a V-Shaped recovery. RINL has achieved highest ever capacity utilization of 6.3 MTPA against the installed capacity of 7.3 MTPA from Dec 2020 and started making a monthly profit of close to INR 200 crores. Continuing this performance for a further period of two years will help the financial situation immensely.
b. Captive Iron Ores mine to Reduce Input Costs
Currently, RINL is purchasing iron ore from NMDC Bailadila mines at market price. This has put the RINL at a cost disadvantage of around INR 5,260 per MT of steel (at ore level). Many of its competitors have captive mines for more than 60% their requirement and buy only the rest from NMDC. Even SAIL has own captive mines with reserves of iron ore sufficient for 200 years. This excess cost of iron ore has cost implications of more than Rs. 3,472 crores for RINL. It is essential to create a level playing field for all the players and hence allotment of captive mines for RINL will help tide over this cost disadvantage. Orissa is blessed with iron ore and allotting the captive mine in Orissa State will go a long way in reviving the plant.
c. Financial Restructuring
Short term loans along with long term loans could be converted into equity taking off repayment pressures and interest burden. The high cost debt which is actually Rs. 22,000 Cr is being serviced at interest rates as high as 14%. Conversion of these loans into equity by the banks so as to remove the interest burden totally and listing the entity (RINL, Vizag) on the stock exchange giving the banks exit option through the stock exchange route through general public may also be explored. These measures could ease the burden of debt servicing and improve the financial sustainability.
d. Monetising land to make the company cash rich
RINL has nearly 7,000 acres of un-utilised lands. Another measure that the Centre can take up is to monetise these lands by way of plotting and sale by RINL itself and the amounts realised will make the company cash rich thereby increasing the valuation of the company. The State Government would provide all necessary permissions for land use conversion to facilitate this intervention.
He requested the prime minister to kindly give him an appointment to explain all the options as narrated above, to revive and put RINL, Visakhapatnam back on track. He said that he will bring an all-party delegation including the representatives of Trade Unions to represent to you directly the concerns being expressed by the people of Andhra Pradesh, employees and various stakeholders. He said that he would assure that Andhra Pradesh Government will closely work with the Government of India under prime minister's leadership in making this happen and together we can revive the plant for unlocking greater value to the society and in particular to the people of Andhra Pradesh. He sought an early appointment in this regard.