Andhra CM Jagan Writes To PM Modi To Reconsider Disinvestment Of RINL; Suggests Measures To Revive Plant

Andhra Pradesh Chief Minister YS Jaganmohan Reddy has requested Prime Minister Narendra Modi to reconsider the disinvestment of state-owned Vishakapatnam-based steel company Rashtriya Ispat Nigam Ltd (RINL), Hindustan Times reports.

Reddy has asked PM Modi to ponder upon other opportunities to put the plant back on the wagon. The Cabinet Committee on Economic Affairs (CCEA) had recently approved the 100 per cent strategic disinvestment of the government’s holdings in the company.

Reddy wrote that RINL is the largest public-sector industrial unit in the southern state and that it employs 20,000 people directly in Vizag. He also pointed towards the company’s profit-making good performance with a positive net worth from 2002-2015 onward. The CM claimed that the plant had to borrow loans in order to carry out capacity expansion and plant modernization.

“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 CM suggested a few measures as he believes that RINL can profitable through intervention and support from the government. 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.

“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 Pradesh.”