Centre rejects RINL-SAIL merger proposal to prevent privatisation

AITUC general secretary and recognised union leader D Adinarayana described as unfortunate outright rejection of their request and said with the support of other unions they will mount pressure to reconsider merger of RINL and SAIL

Visakhapatnam: The Government of India has rejected the proposal of striking unions of Rashtriya Ispat Nigam Ltd as well as the Steel Executives' Association (SEA) and Steel Executives' Federation of India (SEFI) for the merger of the company with Steel Authority of India Ltd (SAIL).

The proposal was made as it will be mutually beneficial. The supporters of the merger proposal argue that it will help RINL to get raw material security because of captive iron ore mines of SAIL. On the other hand, SAIL would have been benefited for future expansion due to RINL's talented workforce and land bank of 20,000 acres. Both the companies are also under the Ministry of Steel.

Union Minister of State for Finance Bhagwat Kishanrao Karad informed Rajya Sabha on Tuesday that the merger proposal was not possible with SAIL or any other Central Public Sector Enterprise (CPSE). The Government of India has 100 per cent shareholding in RINL, the corporate entity of Visakhapatnam Steel Plant. VSP has an annual production capacity of 7.3 million tonnes with ramping up of facilities under the Rs 4,000-crore expansion from 6.3 million tonnes.

In response to a question by BJP member GVL Narasimha Rao, the Minister said that in the larger interest of the organisation, a decision was taken for 100 per cent disinvestment of RINL.

Expressing his anguish over the response to their request, SEA (officers' body of RINL) President Katam SS Chandra Rao told Bizz Buzz that the Centre should reconsider its decision to form a giant public sector steel company with the amalgamation of RINL and SAIL and explore taking up massive expansion in future. He said they will continue their efforts to convince authorities on the need for merger.

AITUC general secretary and recognised union leader D Adinarayana described as unfortunate outright rejection of their request and said with the support of other unions they will mount pressure to reconsider merger of RINL and SAIL.

Turnover up

RINL had a turnover of Rs 28,214 crore in 2021-22 taking advantage of the recovery of the economy. The company clocked Rs 17,980 crore during the previous year. According to information furnished by the government in the parliament, the turnover in the past five years was as follows: Rs 16,618 crore (2017-18), Rs 20,844 crore (2018-19), Rs 15,819 crore (2019-20), Rs 17,980 crore (2020-21) and Rs 28,214 crore (2021-22).

Karad said the Cabinet Committee of Economic Affairs (CCEA), in its meeting held on 27.01.2021, had accorded 'in-principle' approval for 100 per cent disinvestment of GoI's shareholding in RINL along with its stakes in its subsidiaries/ joint ventures through strategic disinvestment by way of privatisation.

The appointment of Transaction Adviser (TA), Legal Adviser (LA) and Asset Valuer (AV) has been completed through a competitive bidding process. The Minister said the government has taken the decision for strategic disinvestment by way of privatisation taking into consideration the need for infusion of capital, latest technological & management practices and operational efficiency in a competitive sector like steel to optimise the economic and job-creation potential of RINL.

Non-strategic sector

The Minister said further, under the New Public Sector Enterprise (PSE) Policy for Atmanirbhar Bharat existing Public Sector Enterprises (PSEs) have been broadly classified under strategic and non-strategic sectors. PSEs in the non-strategic sectors shall be considered for privatisation, where feasible, otherwise such enterprises shall be considered for closure. Steel manufacturing falls in the non-strategic sector.

"In view of the CCEA decision and the New PSE Policy, there is no scope to consider merger of RINL with other CPSEs. Further, keeping in view the intent of New PSE Policy on Atmanirbhar Bharat, as a general policy, Public Sector Enterprises (Central/ State/ Joint)/ State governments, Cooperative Societies controlled by the governments (where 51 per cent or more ownership is by the Central government/ State governments/ jointly by Central and/ or State governments) are not permitted to participate in the strategic disinvestment/privatisation of other PSUs as bidders unless otherwise specifically approved by the Central Government in public interest," the Minister stated.