Vizag Steel: Jagan to take all-party delegation to PM
VIJAYAWADA: In a fresh move to thwart the Central plan for privatisation of Vizag Steel, Chief Minister Y.S. Jagan Mohan Reddy is taking an all-party delegation to New Delhi to meet Prime Minister Narendra Modi and prevail on him to retain its present status.
The CM has sought appointment with the PM at an early date to personally explain the options to revive Vizag Steel. A meeting is proposed between the PM and the all-party delegation.
The referred to the announcement of Union finance minister Nirmala Sitharaman in Lok Sabha on March 8 that the government would go ahead with 100 per cent disinvestment of Vizag Steel equity in Rashtriya Ispat Nigam Ltd (RINL) along with its stake in subsidiaries/joint ventures through strategic disinvestment by way of privatisation. “This is a matter of great concern to the people of Andhra Pradesh as also to employees of RINL and other stakeholders,” the CM has said.
In his letter to the PM, the CM said VSP had a good performance between 2002 and 2015, earning profits with positive net worth. The plant was pragmatically turned-around in 2002 after it was reported to BIFR as a sick company. The company has around 19,700 acres of land and the valuation of these lands alone could exceed Rs 1 lakh crore.
RINL currently has a capacity of 7.3 million tonne and has taken up plant modernisation and capacity expansion. This has helped the plant take loans from banks for expansion. Owing to the unfavourable global steel cycle, the company was making losses since 2014-15 and it was having difficulty to service the debt. One of the major structural issues that also leads to a high cost of production is the absence of captive mine, thereby affecting the profitability.”
The Chief Minister said the plant will again become a profitable venture if some support came from the central government, instead of it taking the disinvestment route, and by implementing some turnaround measures such as allotting captive iron ore mines to bring down the input costs, swapping high cost debt with low cost debt, converting debt into equity through equity conversion and monetization of vacant land.
Reddy requested the PM to consider continuing the unit’s operations as it is, to achieve a turnaround for a further period of two years. Allotting to it some captive mines in Odisha will go a long way in reviving the plant, as also conversion of loans into equity by the banks so as to remove the interest burden and listing the entity (RINL, Vizag) on the stock exchange, giving banks the exit option through the stock exchange route and through general public and monetising the land to make the company cash-rich.
The CM said, “I request you to kindly give me an appointment to explain all the options as narrated above, to revive and put RINL, Visakhapatnam, back on track. I will take along with me an all-party delegation including the representatives of trade unions to represent to you directly the concerns being expressed by the people of Andhra Pradesh, the employees and various stakeholders. I seek an early appointment in this regard.”