Most of RINL Employees May Prefer VRS Amid Uncertainty

Instead of revival package, it will be better if the Centre gives a grant to add it to its equity of Rs5,000 cr and allot captive iron ore mines to reduce its production cost drastically or consider its acquisition by SAIL or NMDC as a long-term solution -- Neerukonda Ramachandra Rao, vice-president, INTUC, tells Bizz Buzz

Visakhapatnam: Notwithstanding the stiff opposition to attempts for rightsizing/downsizing by fund-starved Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), many of its employees may opt for Golden Handshake Scheme mainly due to an uncertain future ahead following worsening of its financial health over the past few years.

Even as the unions are shouting from the rooftops to insist on withdrawal of a recent circular seeking an option from the employees aged above 45 years, who have completed 15 years of service from January 15 to January 31, according to indications inordinate delay in release of salary arrears and the deteriorating financial condition may lead to many taking the VRS route to bid a dignified adieu to the steel plant, once called the ‘Pride of Andhra.’ The steel plant was achieved following an agitation spearheaded in Telugu States of Andhra Pradesh and Telangana when they were united under the aegis of ‘Visakha Ukku Andhrula Hakku.’ INTUC State vice-president Neerukonda Ramachandra Rao told Bizz Buzz on Monday that “instead of revival package, it will be better if the Centre gives a grant to add it to its equity of Rs5,000 crore and allot captive iron ore mines to reduce its production cost drastically or consider its acquisition by SAIL or NMDC as a long-term solution.”

At present, RINL has 12,200 employees on its permanent payroll. RINL has an outstanding loan amount of Rs18,000 crore and owes dues to the tune of Rs7,000 crore to the vendors for getting raw materials and other requirements. In addition, it is in urgent need of a working capital of around Rs10,000 crore for uninterrupted procurement of raw material and running all the three blast furnaces. The credit rating of RINL has been downgraded due to its failure to pay dues to the banks and the vendors. Visakha Ukku Parirakshana Samiti leader J Ayodhya Ram wonders how the company will mobilise the amount required for releasing VRS amount when it is struggling for clearing salary dues even when Sankranti festival is being celebrated this week.

According to an estimate, around 1,000 employees may be allowed for VRS in the first phase involving a financial commitment of Rs600 crore to Rs900 crore as one-time compensation.

The VRS circular has come at a time when there are strong indications by Union Steel Minister HD Kumaraswamy that the Union Cabinet may clear a revival package. While the Ministry of Steel has sought a package of Rs18,000 crore to enable RINL to operate all three blast furnaces thereby achieving its installed capacity of 7.3 million tonnes per annum, the Centre may allow a plan for Rs9,000 crore to Rs10,000 crore due to its financial compulsions. If the plan fails, the Centre may reconsider its earlier decision for 100 per cent privatisation.