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Centre adamant on privatising Vizag steel plant: Unions

By, Hyderabad
Jul 27, 2022 12:39 AM IST

In a written reply to a unstarred question raised by YSR Congress Party MP V Vijay Sai Reddy on Monday, union minister of state for steel Faggan Singh Kulasthe said the VSP had achieved a production of saleable steel of 5,138 tonne in 2021-22 over 4,163 tonne, in the corresponding previous year, which is a high of about 23%.

Trade unions of the Rashtriya Ispat Nigam Limited (RINL), better known as Visakhapatnam Steel Plant (VSP), on Tuesday fumed at the central government for being adamant on privatising the steel plant, despite it making profits.

Trade unions of the Rashtriya Ispat Nigam Limited (RINL), better known as Visakhapatnam Steel Plant (VSP), on Tuesday fumed at the central government for being adamant on privatising the steel plant, despite it making profits. (PTI)
Trade unions of the Rashtriya Ispat Nigam Limited (RINL), better known as Visakhapatnam Steel Plant (VSP), on Tuesday fumed at the central government for being adamant on privatising the steel plant, despite it making profits. (PTI)

In a written reply to a unstarred question raised by YSR Congress Party MP V Vijay Sai Reddy on Monday, union minister of state for steel Faggan Singh Kulasthe said the VSP had achieved a production of saleable steel of 5,138 tonne in 2021-22 over 4,163 tonne, in the corresponding previous year, which is a high of about 23%.

He said during 2021-22, the VSP has recorded a turnover of 28,214.76 crore when compared to 17,980.22 crore in 2020-21. The company had earned a profit after tax of 913 crore during the year, he said.

Kulasthe, however, said there was no question of the Centre going back on its plan of privatising the steel plant. “The Centre was committed to its decision to privatise the company,” he said.

It was on January 27, 2021 that Cabinet Committee on Economic Affairs (CCEA) gave an in-principle approval for 100 percent strategic disinvestment of the government of India shareholding in the RINL along with management control by way of privatisation.

A week later, the Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey tweeted the decision of the CCEA to privatise the RINL, as part of the Central government’s efforts to raise 1.75 lakh crore through strategic disinvestment of loss-making PSUs.

The prime reason cited by the Centre for privatisation of the Visakhapatnam Steel Plant was the huge loss it was incurring over the years. The steel plant with a capacity of 6.3 million tonne, incurred a loss of 3,910 crore during 2019-20 and the revenue from operations was around 15,910 crore.

However, even as the Centre announced the privatisation process forcing 17,000-odd regular employees and workers to go on a warpath, the company entered into profits. During 2020-21, the net loss of the company was reduced to 789 crore and the company achieved a sales turnover of 17,980 crore, a growth of 14 per cent over the previous year.

The employees, under the banner of Visakha Ukku Parirakshana Samithi (committee to protect Vizag Steel), have vowed to continue their protests till the Centre drops the move.

Ch Adinarayana, a trade union leader and one of the convenors of the committee, told HT that the RINL management had been deliberately killing the plant, despite the fact that the employees and workers were struggling to bring the plant into profit mode.

“The plant is being run only with two blast furnaces after the shutdown of the third furnace last year on the pretext of lack of sufficient quantity of raw material including coking coal, which we are importing from Australia. Had the third furnace been under operation, the company would have earned a profit of 3,000 crore,” he said.

The union leader said the company reduced the import of coking coal on the pretext that its cost had shot up to USD 680 and it would increase the production cost. “But in the last couple of months, the cost of the coking coal came down to USD 240. Yet, the management is not showing interest importing sufficient quantities of the raw material to run the third furnace,” he said.

Another trade union leader VM Naidu said the steel plant was now running at 30-40 per cent capacity and production was deliberately scaled down on the pretext of lack of raw material. “While the plant can produce 24,000 tonne of steel per day, it is producing only 10,000 tonne. We are not asking for any salary hike or other incentives. We are only asking the company to operate the plant to its capacity and earn profits,” he said.

Naidu said it would require 200 crore to bring the third blast furnace back into production mode, but the management is not interested. “It is very clear that the government wants to kill a highly productive plant only to hand it over to the private parties,” he added.

The RINL spokesman could not be reached for comment.

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