The hint by a Union Minister on possible revival of disinvestment of Rashtriya Ispat Nigam Limited (RINL) has put the employees of Visakhapatnam Steel Plant, the largest industry in Andhra Pradesh, on the warpath.
Employees owing allegiance to the CITU and AITUC staged dharna separately at the corporate office of RINL, the corporate entity of VSP and India’s first shore-based steel plant. Other unions, including INTUC, threatened to launch an agitation if any attempt was made to offload the government equity in the company.
“Incurring losses for the past two years and this year cannot be an alibi to begin the process for Initial Public Offering of RINL, a navratna company,” CITU State president Ch. Narsinga Rao said.
A senior official of RINL told The Hindu that the Central government was studying on a case-to-case basis the need for disinvestment to realise the target set in the Union Budget by selling away stake in profit/loss-making PSUs.
Union Minister of State for Steel Vishnu Deo Sai, in a reply to YSR Congress Party MP V. Vijayasai Reddy, stated on Wednesday that the Cabinet Committee on Economic Affairs had approved the sale of 10% of RINL’s paid-up capital in 2012. He also referred to the losses incurred by RINL.
Reasons for losses
RINL’s paid-up capital was put at ₹4,889 crore. The loans stand at ₹14,257 crore. The main reason for losses was the prolonged slump in economy, flooding of market with cheap steel from China, interest liability and absence of captive mines.
While SAIL incurs 45% of production cost towards raw material and Tata Steel 35%, RINL spends 60% of production cost towards sourcing raw material and transportation.
The Minister’s statement is being viewed as an attempt to revive disinvestment after putting it in the cold storage for nearly five-and-a-half years. When roadshows were conducted in Singapore and the US for the IPO in 2012, RINL was financially in a good position with continuous record of profit-making.
Now the situation has changed with the company registering a net loss of ₹1,421 crore in 2015-16 and ₹1,236 crore in 2016-17.
‘On recovery path’
Following improvement in the market conditions in the last few months, RINL management hopes to bring down the net loss to less than ₹900 crore during the current fiscal and start earning profits from next year onwards.
Employees’ unions contend that the company is on a recovery path and disinvestment at this juncture will be “suicidal.”
The company achieved a cash profit of ₹20 crore in November and December and is confident of achieving highest-ever turnover of ₹15,000 crore during 2017-18 as against the previous year’s ₹12,781 crore.
