The Ministry of Steel has decided to put on hold the disinvestment of Rashtriya Ispat Nigam Limited, the corporate entity of Visakhapatnam Steel Plant to next financial year.
Official sources told The Hindu that the disinvestment would not be taken up immediately due to volatile market conditions, stiff competition posed to domestic steel industry due to dumping of ‘cheap’ products by China and loss suffered by RINL in the aftermath of Cyclone Hudhud.
Hudhud forced VSP to shut down its operations for sometime. RINL officials admitted immediately after the cyclone that the timeline for disinvestment might change. However, the delay in extending the Navratna status to RINL, a pre-requisite for going for IPO which expired on November 16, was a pointer to Centre’s plan to keep disinvestment under abeyance.
VSP’s recognised union general secretary D. Adinarayana said the company had suffered heavy loss due to lowering prices to clear inventory following flooding of market with China-made steel.
The Centre will offload 10 per cent of equity of RINL as part of its plan to mobilise funds. The NDA government had declared its target to realise Rs.43,425 crore by selling 10 per cent of equity in RINL and Hindustan Aeronautics Ltd and five per cent in SAIL and Rs.15,000 crore by selling residual stake in BALCO and Hindustan Zinc Ltd.
RINL management after appointing merchant bankers to manage the IPO had submitted draft red herring prospectus to market regulator SEBI in September. RINL, which is ramping up production after completing 6.3 million tonne expansion at a cost of Rs.12,300 crore with internal accruals, plans to go for next phase of expansion to achieve a capacity of 12 million tonne with an investment of Rs.22,000 crore.
