Andhra CM writes to PM Modi requesting to reconsider RINL disinvestment plans
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Hyderabad, February 08: Writing a letter to Prime Minister Narendra Modi, Andhra Pradesh Chief Minister YS Jaganmohan Reddy has requested him to reconsider the disinvestment of state-owned Vishakapatnam-based steel company Rashtriya Ispat Nigam Ltd (RINL).
Talking about the decision about the RINL, Reddy wrote that the recent decision of the Cabinet Committee on Economic Affairs (CCEA) which has given in-principle approval for 100 percent strategic disinvestment of Government of India's shareholding in RINL along with management control by way of privatisation and the media reports about the Union Cabinet's clearance of the same has raised concerns in the state.
He said the state government is ready to work with the Steel Ministry to protect the Public Sector Enterprise, which employs 20,000 people directly and many others indirectly. "The Government of Andhra Pradesh is ready to work with the Ministry of steel to protect the jewel of Andhra Pradesh. Therefore, I request you to kindly reconsider the disinvestment plans of RINL Visakhapatnam and explore other opportunities to put the plant back on track," he said in the letter.
“Owing to the unfavourable steel cycle globally the company was making losses since 2014-15 and was finding it difficult to service the debt. One of the major structural issues that also leads to the high cost of production is the absence of captive mine thereby affecting the profitability,” Reddy stated.
The Andhra CM also suggested immediate measures to adopt in order to strengthen the viability of the plant. "Sir, I can emphatically say that the plant will again become a profitable venture given some support from the Government of India instead of taking the disinvestment route," Jagan Reddy said in the letter to PM.
These steps include allotting captive iron ore mines to the company and a financial restructuring that will convert short and long term loans into equities by pulling out pressures of repayment and interest burdens too. He also suggested that RINL be allotted captive Iron Ore Minister in order to reduce the input cost.
“The high-cost debt which is actually Rs. 22,000 cr is being serviced at interest rates as high as 14 per cent. Conversion of these loans into equity by the banks so as to remove the interest burden totally and listing the entity (RINL, Vizag) on the stock exchange giving the banks exit option through the stock exchange route through general public may also be explored. These measures could ease the burden of debt servicing and improve the financial sustainability,” Reddy further mentioned in his letter.
He assured that the state government will work in close coordination with the central government to revive the plant and “unlocking the greater value to the society and in particular to the people of Andhra Pradeh. He stated, "Therefore, I request you to kindly reconsider the disinvestment plans of RINL Visakhapatnam and explore other opportunities to put the plant back on track. I assure you that Andhra Pradesh Government will closely work with the Government of India under your able leadership in making this happen and together we can revive the plant for unlocking the greater value to the society and in particular to the people of Andhra Pradesh."