Paving the way for privatisation of the Public Sector Undertakings (PSUs), the Cabinet approved the implementation of strategic disinvestment in Vizag Steel Plant. The Rashtriya Ispat Nigam Ltd. (RINL), also known as Vizag Steel Plant, is a ‘Navratna’ PSU that runs with a capacity of 6.3 million tonne per annum (mt). It may be noted that the Central Government currently holds a 100 percent stake in the company that makes products used in the construction industry.
Reportedly, the decision to approve the privatisation of the Vizag Steel Plant was taken by the government a few days ago. Furthermore, the Cabinet entrusted powers to the Alternative Mechanism headed by the Union Finance Minister, Nirmala Sitharaman, to decide whether the subsidiaries of Vizag Steel Plant will be part of the transaction, depending on the feedback from potential investors.
It may be noted that the steel-making organisation has been incurring heavy losses since 2017, except for the financial year 2019 when it achieved a net profit of Rs 96.71 crore. According to the report submitted by the Union Ministry of Steel, Vizag Steel Plant is the only steel-manufacturing facility among the Public Sector Units in the country that has no captive iron ore mine. The report further attributed the losses majorly to the captive mines issue. The Ministry of Steel stated that the RINL is procuring the iron ore supplies at market price, due to which the steel plant has been incurring a loss of at least Rs 5000 on every tonne.
On the other hand, the plant has been operating with three blast furnaces since February 2020 to boost steel production. The RINL also runs RINMOIL Ferro Alloys Pvt Ltd, an equal joint venture with MOIL Ltd, and RINL Powergrid TLT Pvt Ltd, also an equal joint venture with Power Grid Corporation of India Ltd.