Visakhapatnam Steel Plant: 1 year on, privatisation makes no headway

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

The proposed privatisation of Rashtriya Ispat Nigam Limited (RINL), better known as Visakhapatnam Steel Plant (VSP), has made no headway, a year after the Centre made an announcement to that effect, even as the public sector steel giant, according to its management, has registered record turnover and is all set to make profits this financial year.

The prime reason cited by the Centre for privatisation of the Visakhapatnam Steel Plant was the huge loss it was incurring over the years. (PTI)

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

A week later, department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey tweeted the decision of the CCEA to privatise RINL, as part of the Central government’s efforts to raise ₹1.75 lakh crore through strategic disinvestment of loss-making PSUs.

“Former steel minister Dharmendra Pradhan and finance minister Nirmala Sitaraman, in their replies to the queries raised by Andhra Pradesh MPs in parliament, asserted that there is no question of going back on the privatisation of Visakhapatnam Steel Plant. But there is little progress in that direction,” a senior official of the RINL said on the condition of anonymity.

A few months ago, he said, the Central government had finalised multinational accounting firm Ernest and Young as its consultants to oversee the privatisation process, and prominent solicitors Chandhiok and Mahajan to look after legal issues. “Both the companies were selected through a competitive bidding process, but they are yet to commence the process,” the senior official said.

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 tonnes incurred a loss of ₹3,910 crore during 2019-20 and the revenue from operations was around ₹15,910 crore, according to the results announced by the management.

Even as the Centre announced the privatisation process triggering protests by about 17,000 regular employees and workers, the company started earning 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, according to the results disclosed by the management.

“This was despite the fact that the steel plant was shut down for a couple of months and later with 50 per cent staff due to Covid-19. It only shows how strong the company is and how dedicated the workers are,” Ayodhya Ramu, a senior employee of the company and convener of Visakha Ukku Parirakshana Samithi (Committee to protect Vizag Steel), told HT.

This financial year, the RINL achieved best-ever sales value of ₹19,357 crore in the first three quarters, ending December 31, according to the results declared. This is the highest during the nine months of a financial year for the company since its inception.

“Going by this growth, we are expected to achieve the sales turnover of ₹28,500 crore by this financial year-end. The company is all set to achieve a net profit of ₹1,000 crore,” Ramu claimed.

“The company’s lands and assets are worth over ₹1.50 lakh crore. But the government would not get even 25 per cent of it through privatisation,” he claimed.

Ramu said this year alone, the company would be paying ₹5,000 crore to the government in the form of Goods and Services Tax. “Besides, the government would also indirectly get tax money from the employees. Where is the need to privatise it?” he asked.

The Visakha Ukku Parirakshana Samithi is planning a series of agitations in the next one month to bring pressure on the Centre to drop the privatisation move. “We commenced our agitation on February 12 last year against the privatisation under this banner. To mark the completion of one year of our agitation, 365 employees would take up day-long hunger strike on February 12,” Ramu said.

The committee would take up a signature campaign against the privatisation move. “We shall mobilise one crore signatures of the people across the state and send the same to the Centre. We are planning to storm the BJP offices all over the state on February 13 to register our protest. We have called for a statewide shutdown on February 23,” he said.