The Cabinet Committee on Economic Affairs (CCEA), has “in principle” approved the 100% divestment of the Government of India (GoI) holding in Rashtriya Ispat Nigam Limited (RINL) along with the latter’s stakes in subsidiaries/joint ventures.
Working towards this end, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has invited proposals for the engagement of a legal advisor for completing the transaction.
The request for proposal (RFP) can be previewed and downloaded from the Central Public Procurement Portal as well as from the websites of DIPAM, Ministry of Steel and RINL.
Experts in the divestment process observed that the entire procedure will take 2-3 years to complete and finding a legal advisor to the deal itself may take 3-4 months.
Also, SteelMint learnt, with the divestment decision gaining traction, the expansion plan to 12 mnt pa from the present 7.3 mnt pa really has no meaning now and has been shelved. The PSU is now in consolidation mode and trying to reach its optimal capacity of 7.3 mntpa from the present operating level of 6.3 mntpa.
Resistance to the divestment
There has been widespread resistance within the Andhra Pradesh state government as well as the PSU unions against the divestment decision. The state government of Andhra Pradesh earlier indicated it would be willing to participate in the bidding process to buy out the plant, if the Centre went ahead with the sale.
Sources said RINL achieved its highest-ever capacity utilisation of 6.3 mntpa against the capacity of 7.3 mntpa from December, 2020 and started making a monthly profit of close of INR 200 crore. “If RINL is allowed to run without privatisation for another two years, the company’s financial situation will improve immensely,” a source observed.
Q1FY’22 performance
In Q1FY’22, RINL’s saleable steel sales stood at 10.43 lakh tonnes against 6.78 lakh tonnes in CPLY, registering a growth of 54%.
The turnover was at of INR 5,223 crore, growing 126% against INR 2,306 crore in CPLY.
Saleable steel production stood at 12.37 lakh tonnes against 6.26 lakh tonnes, growing 98% y-o-y.
Domestic saleable steel sales stood at 7.43 lakh tonnes against 3.67 lakh tonnes in CPLY, registering a growth of 103%.
~ By Madhumita Mookerji
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