Strategic sale talk makes RINL staff restive

Unions to stage phase-wise protests to put pressure on Centre to shelve its plan

Visakhapatnam: The buzz on strategic sale of Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant popular as Vizag Steel in the corporate world, has forced the employees to seethe with anger.

Agitated over reports on prospects of clearing the move for strategic sale of RINL for its deteriorating financial health, the employees' unions have decided to launch a phase-wise protest programme. Recognised union president J Ayodharam said they had convened a meeting of all unions to organise a huge dharna at Gandhi statue near GVMC and to hit the streets to bring pressure on the BJP-led NDA Government to drop the plan.

He told Bizz Buzz that the steel plant was set up after 'Visakha Ukku Andhrula Hakku' agitation in undivided Andhra Pradesh spearheaded by stalwarts like Tenneti Viswanatham. The agitation had claimed 32 lives 55 years ago.

Reports in a section of the media had stated that the Department of Investment and Public Asset Management (DIPAM) has approved the proposal. Finance Minister Nirmala Sitharaman may name PSUs listed for strategic sale during 2021-22 as the government fell short of realising its target for disinvestment during the current fiscal. As against a target of Rs 2.10 lakh crore, it could mop up nearly 18,000 crore.

RINL had expanded its capacity from 3 million tonne to 6.3 million tonne with an investment of Rs 12,300 crore and subsequently raised its production to 7.3 million tonne by modernising blast furnaces and other critical facilities with an investment of Rs4,000 crore.

It has a land bank of 20,000 acres. The Navratna company is in talks with Korean steel giant POSCO for establishing a five million tonne greenfield special grade steel plant on its premises at Ukkunagaram. The land to be given to POSCO will become RINL's equity in the joint venture if the project is finalised.

RINL clocked a turnover of Rs 20,844 crore in 2018-19 and Rs15,920 crore in 2019-20. For the past few months, it is getting benefited due to sudden increase in demand for steel products. RINL mostly makes long products used for construction. Unlike other major steelmakers, RINL does not have captive iron ore mines making its production cost very high. The Cabinet Committee on Economic Affairs had cleared 10 per cent disinvestment in 2012 after which merchant bankers were appointed for valuation. The IPO process was also initiated.

However, due to volatile market conditions it was postponed and subsequently a couple of attempts were made to list the company. "Now the situation is very precarious due to heavy loan liability of an estimated Rs 20,000 crore due to which the company cannot afford expansion as per its corporate vision. Hence, strategic sale is the only option to fund future expansion," former Chairman-cum-Managing Director of RINL Y. Siva Sagar Rao said, when his opinion was sought on strategic sale talk. There is no official confirmation yet on strategic sale though it has been making rounds for a long time. Launching of a VRS was floated sometime ago but it could not be executed due to resource crunch.

Katam SS Chandra Rao, joint secretary, Steel Executives' Federation of India said instead of strategic sale, the Centre should consider its last year's proposal for mega merger of RINL, SAIL and NMDC, all under Ministry of Steel, into a single entity. "This will help achieve around 50 million tonne of expansion-a big step towards realising the 300 million tonne target set for 2030," he said.

RINL increased its exports by 141 per cent by exporting one million tonne amounting to Rs 3109 crore at the end of third quarter. It is also making efforts to operationalise mines owned by Orissa Minerals Development Corporation (OMDC), in which RINL has strategic control.