Volatile market conditions, severe criticism that led to dropping of the decision to sell total government equity in the Dredging Corporation of India Ltd. (DCIL), and the general elections due next year may force the Centre to put on hold the decision on 10% disinvestment of Rashtriya Ispat Nigam Limited (RINL).
Informed sources told The Hindu that, in all probability, the offloading of 10% paid-up equity of RINL out of the Government of India’s shareholding of 100% through an Initial Public Offering (IPO) would take place only after the formation of the new government post the 2019 elections.
RINL is the corporate entity of the Visakhapatnam Steel Plant.
DCI issue
The government had already burnt its fingers after it announced the strategic sale of DCIL exactly one year ago. It later dropped the decision. Subsequently, the Cabinet Committee on Economic Affairs gave its nod to the proposal to transfer the government’s equity in the company to a consortium of four public sector ports led by the Visakhapatnam Port Trust.
Incidentally, both RINL and DCIL have their corporate offices in Visakhapatnam.
The RINL disinvestment decision was cleared by the Union Cabinet in 2012. The IPO was put off first due to gloomy market conditions after obtaining clearance from the market regulator, SEBI, and conducting overseas roadshows. Subsequently, three attempts were made to go public.
However, the talk of disinvestment remained alive ever since the first ₹2,500-crore IPO notification had been cancelled, attracting severe criticism by the trade unions.
After net losses for three consecutive years due to dumping of cheap steel from China and CIS countries, increase in coal prices, both imported and domestic, and accidents at workplace led to the authorities developing cold feet on going ahead with disinvestment of the ‘navratna’ company.
This year, the target for disinvestment was raised by 10% to ₹80,000 crore. The steel industry, which was in a bad shape for a long time, started recovering with appreciation of demand in the past few months.
RINL officials exude confidence that this year they will be achieving marginal profit.
Modernisation
RINL has already completed modernisation of blast furnaces and other critical facilities at a cost of ₹4,000 crore after stabilising the 6.3 million tonne expansion project undertaken at a cost of ₹12,300 crore.
The ₹4,000-crore modernisation further increased the capacity of the plant to 7.3 million tonne.
