In the financial year 2021-22, Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), registered the best ever performance since its inception. It recorded a sales turnover of ₹28,008 crore, which is almost 56 percent above the sales of its corresponding previous year. It also registered ₹835 crore as profit before tax, after a gap of six years.
This has pepped up the mood of the employees and trade union leaders who have been agitating since February last year against the proposed 100 percent strategic sale of the plant by the Union Government. The Finance Minister in January, 2021 had said that the VSP was up for 100 percent strategic sale as it is a ‘loss making PSU’. The employees strongly countered this point and said the plant has the potential to become one of the premier steel plants in the country.
Since inception, the production capacity has already gone up from 3 million tonnes to 7.3 million tonnes per annum (MTPA) and there are ample opportunities to scale it up to a 20 mtpa plant in the future. The production began in 1990-91 and till 2001-02, it suffered losses. But from 2002-03 to 2014-15, it made profits. But again from 2015-16 to 2017-18, it made losses. In 2018-19, there was again a turnaround and it made profits, but again due to COVID-19, it suffered losses in 2019-20 and 2020-21.
The VSP was never a loss-making unit. If it did, it was due to some policy decisions and neglect of the Union Government, said Ch Narasinga Rao, one of the chairmen of Visakha Ukku Parirakshana Porata Committee (VUPPC), which is an umbrella organisation under which the employees have been agitating.
After going into production in 1991, till around 2000 it had accumulated losses of about ₹4,000 crore. The members of Steel Executive Association (SEA) say that the initial losses were due to no fault of the plant. The original estimate for the plant was ₹1,900 crore, but by the time it had gone into production, due to delay in construction for about 25 years, the cost had gone past ₹8,000 crore. The government had given only ₹4,986 crore and the rest was raised from the open financial market by VSP at a high interest rate. The VSP has so far paid interest on loans to the tune of about ₹18,000 crore. It has accumulated losses of ₹12, 973 crore and profits of ₹18,069 crore.
Captive mines
The Union Government had never sanctioned the plant a captive iron ore mine, despite its project consultant M. N. Dastur recommending the lease of captive mines in the Bailadila blocks for its healthy survival, way back in the early 1970s. Due to lack of captive mines, VSP has been incurring an additional expenditure of about ₹4,000 to 6,000 per tonne for raw material. Rubbing salt into the wound, the Central government has cancelled the coal mines lease to VSP at Rabodih in Jharkhand. The reason for cancellation is not clear to the employees of the plant.
Setting up of the plant had turned into a political movement after 32 people died in police firing on November 1, 1966 across the State, which includes 12 in Visakhapatnam. The slogan ‘Visakha Ukku Andhrula Hakku’ had reverberated not only across the State, but also in New Delhi, forcing the then Congress Government to set up the plant here.
Over 22,000 acres were taken by the government, displacing close to 16,800 families from 68 villages. As per the records, jobs are yet to be provided for about 7,000 Rehabilitation card holders even after four decades. It is also the only shore-based integrated steel plant with huge expansion capacity in the country. While the then government in 2013 had valued the plant's net worth at around ₹4,898 crore, factoring land cost, it is over ₹2 lakh crore, say the VUPPC members.
(sumit.b@thehindu.co.in)
