Urging the Centre to reconsider its selection to privatise Rashtriya Ispat Nigam (RINL), Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy has recommended 3 measures which includes conversion of the company’s Rs 22,000 crore current loan into equity for the revival of “state’s jewel”.
“I can emphatically say that the plant will again become a profitable venture given some support from the Government of India instead of taking the disinvestment route by some turnaround measures such as allotting captive iron ore mines to bring down the input costs, swapping high-cost debt with low-cost debt and converting debt into equity through equity conversion,” Reddy wrote in a 4-web page letter to Prime Minister Narendra Modi.
Reddy stated considering the fact that the debt has been carrying 14% price of interest, conversion of the Rs 22,000 crore debt into equity by the banks would aid the organization to take away its interest burden and boost its economic stability.
“Conversion of these loans into equity by the banks to remove the interest burden totally and listing the entity on the stock exchange giving the banks exit option through the stock exchange route through general public may also be explored,” the CM recommended.
RINL suffered a loss of Rs 1,369 crore in 2017-18 but was in a position to recover briefly with a net profit of Rs 97 crore in 2018-19. However, once again in 2019-20, it suffered Rs 3,910 crore loss. The organization recorded Rs 16,618 crore income in 2017-18 Rs 20,844 crore in 2018-19 and Rs 15,920 crore in 2019-20.
Reddy also pointed out that considering the fact that RINL does not have any captive iron ore mine and therefore, has to obtain iron ore from the open marketplace, it is at a disadvantageous position forking out Rs 5,260 additional for producing each tonne of steel compared with a lot of of its competitors.
“This excess cost of iron ore has cost implications of more than Rs 3,472 crore for RINL. It is essential to create a level playing field for all the players and hence allotment of captive mines for RINL will help tide over the cost disadvantage,” he stated. Currently, RINL purchases iron ore from NMDC.
The Chief Minister also stated that considering the fact that the organization has been earning a month-to-month profit of Rs 200 crore for some months now buoyed by greater capacity utilisation, the continuance of “this performance for a further period of two years will help the financial situation immensely”.
In the letter written on a passionate note, Reddy stated the Vizag plant was realised only soon after a lot of sacrifices by the persons of the state.
“The people of my state rallied for the Visakhapatnam Steel Plant in which 32 people have laid down their lives. On April 17, 1970, the then Prime Minister of India, announced the government’s decision to establish a steel plant at Visakhapatnam culminating the decade-long public agitation ‘Visakha Ukku – Andhrula Hakku’ in the undivided AP.”
RINL is the biggest public-sector industrial unit in the state generating employment possibilities for close to about 20,000 persons straight and a lot of other indirect employment possibilities. The organization has 19,700 acres of land at present and the valuation of these lands alone could exceed Rs 1 lakh crore due to the place of the plant in the urban location and swiftly expanding urban sprawl.