Cutting across party affiliations, all trade unions of the Rashtriya Ispat Nigam Limited (RINL), which is facing severe cash crunch due to a variety of reasons, have reiterated their demand for consideration of its merger with the National Mineral Development Corporation (NMDC).
Terming it as “mutually beneficial,” the INTUC, the CITU, the AITUC, and other unions, in representations submitted to the Ministry of Steel, say the merger will put an end to the raw material insecurity of RINL and give NMDC the right expertise to foray into steel production.
NMDC, which is setting up a three million tonne steel plant at Nagarnar near Jagdalpur in Chhattisgarh, is not able to complete the project on time as it has no expertise in steel production.
NMDC, the mining giant of the country, has already spent ₹12,000 crore on construction. To roll out steel from the plant, it needs further investment of ₹10,000 crore.
“We appeal to Union Steel Minister Chaudhary Birender Singh to initiate the merger move. This will help both the public sector companies in achieving their corporate goals,” Steel Plant Employees’ Union president J. Ayodhyaram told The Hindu on Tuesday.
Mr. Singh, who arrived in the city in the evening, will review RINL performance on Wednesday, he said.
RINL’s financial position has turned precarious after incurring net losses for two successive years.
Flooding of he domestic market with cheap steel from China and other countries and slump in the economy has hit it hard.
The 6.3 million expansion project completed at a cost of ₹12,300 crore with internal accruals is now being ramped up. Another ₹4,000 crore is being invested to increase the capacity to 7.3 million tonne in a year by increasing the performance of the blast furnace and other critical equipment.
Interest burden
Mr. Ayodhyaram said RINL, the corporate entity of Visakhapatnam Steel Plant, at one point of time used to get an interest of ₹800 crore to ₹900 crore. Now, because of capital expenditure loans, the plant is forced to spend heavy amount towards interest.
RINL is spending almost 40% to 45% of production cost towards sourcing raw material. If it is merged with the NMDC, there will be permanent end to raw material problem.
An alternative
Another alternative, the unions say, will be to convert RINL, NMDC, and Nagarnar Steel Plant into a joint venture. Preferential treatment in consuming Vizag Steel for construction of Polavaram, a Centre-funded national irrigation project, and the new capital of Amaravati are yet to be considered.
The employees are also feeling agitated for not withdrawing the disinvestment proposal.
