Even as the movement against 100% divestment of Rashtriya Ispat Nigam Limited (RINL) hots up, the state government of Andhra Pradesh has indicated that it would be willing to participate in the bidding process to buy out the plant, if the Centre went ahead with the sale.
Sources informed SteelMint that, at a large gathering at the gates of the Vizag Steel Plant (VSP) held on February 11, Parliamentary Chairperson in the YSR Congress Party ruled state, V. Vijaysai Reddy, said, if the central government did not listen to all those opposing the 100% divestment of RINL then the state government would participate in the bidding process in an effort to buy out the plant, a source informed SteelMint.
Earlier, state Chief Minister, Y.S. Jagan Mohan Reddy, wrote an impassioned letter to Prime Ministeer Narendra Modi, urging a reconsideration of the divestment proposal and to explore other opportunities to put the plant back on track.
He even suggested a few ways in which the company could be revived. One was that since RINL has achieved its highest-ever capacity utilisation of 6.3 million tonnes per annum (mntpa) against the capacity of 7.3 mntpa from December, 2020 and started making a monthly profit of close of INR 200 crore, continuing this performance for a further period of two years will help the financial situation immensely.
Secondly, the CM suggested, allotment of captive mines will help tide over the cost disadvantage RINL was facing in purchasing iron ore from NMDC’s Bailadila mines at market prices. This has put RINL at a cost disadvantage of around INR 5,260 per tonne of steel, at ore level. Many of RINL’s competitors get 60% of their ore requirements from captive mines.
Thirdly, he said, under financial restructuring, short term loans along with long term loans could be converted into equity taking off repayment pressures and interest burden. RINL’s high cost debt of INR 22,000 crore is being serviced at a high interest rate of 14%.
Conversion of these loans into equity by the banks so as 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 be explored Reddy said.
Another source has proposed that since SAIL has captive mines with reserves that can last 200 years, the government could explore a merger of RINL with the former, both being government-owned. Such a move could wipe out RINL’s losses, it is suggested.
By Madhumita Mookerji
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