Trade union leader urges govt to issue LoC to help RINL secure bank loans

RINL Revival Plan:

• Leasing out 1200 acres to NMDC will fetch Rs 1500 cr lease rental to RINL
• Merger of RINL with SAIL is a permanent solution for RINL
• To improve RINL’s financial health, Govt should give 2 months tax holiday
• Allotment of Block No. 1 and 2 iron ore mines at Bailadila is needed for RINL

Visakhapatnam: A prominent trade union leader has appealed to the Government of India to issue a Letter of Comfort (LoC) to Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant to borrow loans from the banks as one of the solutions to put the cash-strapped company back on a profit-making track.

Visakha Ukku Parirakshana Porata Samiti Co-Chairman and CITU-affiliated Steel Plant Employees’ Union (SPEU) honorary president J Ayodha Ram told Bizz Buzz on Tuesday that though the banks are ready, RINL is unable to borrow from the banks to meet its working capital requirement for want of counter-guarantee from the Ministry of Finance. As RINL is a 100 per cent Government of India-owned company, the Letter of Comfort is a must to obtain loans, he stated.

While emphatically stating that monetisation by selling its lands and properties is not a viable solution to meet its working capital needs, he said such decisions taken at the behest of the Ministry of Steel will only weaken the steel plant, which was set up after ‘Visakha Ukku Andhrula Hakku’ agitation in the 1960s. The agitation led to resignation of several MPs and MLAs, death of 32 protesters in police firings on spread of reports that the steel plant will be set up in another State and a fast-unto-death launched by freedom fighters like T Amruta Rao.

Greeting new Union Minister for Coal and Mines G Kishan Reddy and Minister of State for Steel Bhupatiraju Srinivas Varma from the Telugu-speaking States of Telangana and Andhra Pradesh, he said crores of Telugu people from undivided Andhra Pradesh expect that the Centre to grant captive iron ore and coal mines to help RINL achieve raw material security. RINL is the only major steelmaker devoid of captive mines.

Aodhya Ram wanted early approval from the Centre for leasing out of 1200 acres to NMDC, which wanted to establish a pelletisation plant on the lands belonging to RINL near the steel plant. RINL and NMDC boards have already cleared the proposal. If Centre issues NOC to the proposal, it will fetch Rs1500 crore lease rental to RINL, he pointed out. Ayodhya Ram, while reiterating the demand for merger of RINL with Steel Authority of India Ltd (SAIL) for a permanent solution, said immediately, the Centre should give two months’ tax holiday to RINL to improve its deplorable financial health. He also wanted allotment of Block No. 1 and 2 iron ore mines at Bailadila in Chhattisgarh. All these measures will enable RINL to earn huge profits and ensure production of full capacity. At present, due to working capital crunch and raw material shortage, the steel plant is not able to run all the three blast furnaces.

RINL production has been increased to 7.3 million tonnes in phases by increasing the capacity from three million tonnes per annum. There should also be plans in place to increase the capacity further as part of a multi-pronged strategy to transform the company into a formidable steel plant with a diversified product basket.