Centre puts Vizag Steel Plant up for sale
RINL, the corporate entity of Visakhapatnam Steel Plant, well-known under the brand of Vizag Steel has incurred heavy losses in recent years due to increasing debt liability and high production cost on account of raw material insecurity
image for illustrative purpose
To divest its stake, cede management control; GoM to finalise timelines
Visakhapatnam: Hectic speculation over strategic sale of Rashtriya Ispat Nigam Limited, often described as 'Pride of Andhra Pradesh' has come to an end with an official announcement that the Union Cabinet has cleared it for contributing part of Rs 1.75 lakh crore target set from disinvestment in the budget proposals made for 2021-22.
Sources told Bizz Buzz that a Group of Ministers would finalise the timelines for strategic sale of RINL along with disinvestment of other public sector units identified as strategic and non-strategic by the Department of Investment and Public Asset Management (DIPAM) in consultation with NITI Aayog.
The Centre has already admitted that this fiscal they are falling far below the target for disinvestment of public sector enterprises due to the impact of Covid-19 pandemic on the economy.
RINL, the corporate entity of Visakhapatnam Steel Plant, well-known under the brand of Vizag Steel has incurred heavy losses in recent years due to increasing debt liability and high production cost on account of raw material insecurity. Barring RINL, which has its headquarters in Visakhapatnam along with Dredging Corporation of India Limited (DCIL), all other major steelmakers have captive iron ore and coal mines.
DIPAM Secretary Tuhin Kanta Pandey in a tweet stated on Wednesday evening, "The CCEA (Cabinet Committee on Economic Affairs) has given in principle approval for strategic disinvestment of government shareholding in RINL along with management control by way of privatisation."
This was the first official confirmation of the go-ahead signal by the government for handing over RINL, which has a land bank of 20,000 acres.
Orissa Minerals Development Company (OMDC) and Bisra Stone Lime Company (BSLC) as its subsidiaries after picking up majority equity on payment of Rs 361 crore in Eastern Investments Ltd in 2010.
RINL is a 100 per cent government owned navratna company, which invested nearly Rs 17,000 crore on expansion from 3 to 7.3 million tonne in two phases. It also has a joint venture with Railways for manufacturing forged wheels at Rae Bareli (UP) with an investment of Rs. 1,680 crore.
An attempt was made in 2012 to list RINL by offloading 10 per cent of government equity, which was dropped due to volatile market conditions. RINL board has already approved a Voluntary Retirement Scheme. It has a total workforce of 17,500 as on January 1, 2021. According to unofficial estimates, RINL losses have mounted up to Rs 20,000 crore."We have crossed Rs 2,100 crore sales turnover in December, 2020 after a gap of 20 months and we are expecting to achieve a net profit of Rs 170 crore in December, 2020, after a gap of 29 months," RINL Chairman-cum-Managing Director P K Rath was quoted in a release issued on January 1. Reacting to confirmation of strategic sale through a tweet, Katam SS Chandra Rao, joint secretary, Steel Executives' Federation of India, said instead of strategic sale, there should be merger of steel PSUs including RINL, SAIL, NINL and NMDC.
Bharatiya Mazdoor Sangh national vice-president M Jagadeeswara Rao said their union would oppose the decision and strongly demand mega merger of RINL, SAIL and NMDC. BMS will soon depute a delegation to represent to the government on their proposal.
