AP Chambers terms VSP sale 'disheartening'

Vijayawada: The Andhra Pradesh Chamber of Commerce and Industry Federation expressed concern over the recent decision by the Cabinet Committee for Economic Affairs to grant in-principle approval for 100 per cent divestment of Centre's stake in Rashtriya Ispat Nigam Ltd (RINL) which is disheartening to the people of Andhra Pradesh.

K V S Prakasha Rao president of AP Chambers in a statement here on Tuesday recalled that the RINL, popularly known as Visakha steel plant, was established in Visakhapatnam after years of agitation and sacrifice by the people of AP after 32 people lost their lives during the fight for the establishment of the steel plant. The RINL is considered a crown jewel among the PSUs in the state and the people are emotionally attached to it. The Vizag Steel Plant is the largest Navaratna PSU in Andhra Pradesh that directly employs around 20,000 people besides providing indirect employment to thousands of others.

It is the first shore-based integrated steel plant in the country that is well known for its quality products and caters to the needs of diverse industrial sectors. The RINL has around 19,700 acre land in prime urban area and the estimated value of this land is more than Rs 1 lakh crore. The RINL posted profits for almost 12 years until 2014. On account of the global decline in the demand for steel, the company has been posting losses since 2014-15. The borrowing from banks is on account of the expansion and plant modernisation plans that the company took up recently.

Because of these factors the company is finding it difficult to repay its loans. The absence of a captive mine for RINL results in high input costs as the company buys iron ore at market rates.

The AP Chambers president appealed to the Central government to allot a captive mine to RINL similar to other SAIL plants that have captive mines allotted to them. This will enable RINL reduce its cost of production and offer its products at competitive rates.

The capacity utilisation of the plant is currently at 6.3 MTPA as against its maximum capacity of 7.3 MTPA and RINL has been posting profits every month since December 2020. If the company continues this trend, its financial position will be much stronger within the next couple of years.

He urged the Central government to take into cognisance the strengths of RINL and reconsider its decision to divest its stake in RINL. He also request the government to pursue other options to revive RINL and put it back on a path to recovery and help the company become financially healthy.