The Central government has dropped plans to privatise the Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), sources told Business Today on Tuesday. RINL, a part of the Ministry of Steel, manages a 7.5 million tonnes facility in Visakhapatnam, Andhra Pradesh, making it India’s inaugural shore-based integrated steel plant.
The government is planning RINL’s revival and has reportedly infused Rs 1,650 crore in the last two months. Of this amount, Rs 500 crore has been invested in equity and the rest as working capital. RINL is in discussions with banks for a new restructuring package to enhance working capital. The government is formulating a restructuring plan to ensure RINL’s survival, the government sources told BT TV.
Ever since Finance Minister Nirmala Sitharaman announced in January 2021 regarding the 100% strategic sale of Rashtriya Ispat Nigam Limited (RINL), employees associated with unions like AITUC, CITU, and INTUC have been actively demonstrating against the decision. As the only shore-based steelmaking public sector unit (PSU) in the country, the VSP employees are vehemently opposing any takeover by a private company.
The Centre now has tweaked the top management in the company and has appointed a new CMD to lead the revival.
The source said that the merger with SAIL is not on the cards as of now as the worker unions didn’t want that. SAIL, a subsidiary of the steel ministry, is another entity under its purview.
Previous reports indicated that the government was considering merging INL with SAIL, a state-owned steel company, as a potential solution to address the financial and operational challenges faced by RINL, a steel maker based in Andhra Pradesh. In order to secure the future of RINL’s plant, strategies such as selling a land parcel to NMDC and securing bank loans are being deliberated to provide the necessary capital for the plant’s operations to continue smoothly.
In the past three years, the plant has experienced significant losses and a substantial decrease in daily production due to only one blast furnace being operational out of the three. In response to the financial challenges, management has discontinued all employee benefits and is consistently delaying salary payments by 20 to 30 days each month.
The plant has been facing severe cash flow limitations, to the extent that it is unable to access imported coking coal for its coke oven from warehouses at the Gangavaram and Visakhapatnam ports. Currently, the plant has a total workforce of approximately 12,600 permanent employees and 14,000 casual workers.
