Coalition dharma may see revival of Vizag steel plant

The Telugu Desam Party (TDP), a key constituent of the National Democratic Alliance (NDA) government at the Centre, may facilitate value unlocking at Rashtriya Ispat Nigam Ltd at Vishakapatnam.

In December 2021, the Union Cabinet approved the privatisation plans for RINL, giving a nod for the 100 per cent strategic disinvestment of the company. However, the process has been stalled since then due to the opposition of the Andhra Pradesh government led by the YSRCP. With the TDP back in power in the state, things are looking up for a revival of the company that is in line with the centre’s priorities.

“We are cooperating with the centre for the best possible outcome,” a TDP leader told Business Today TV.

Several meetings have taken place between Andhra Pradesh government officials and Union Heavy Industries and Steel Minister H.D. Kumaraswamy, who recently visited Visakhapatnam to inspect the plant.

Sources indicate that "value creation” would be the focus of the new plan, aligning with the centre’s priorities to enhance public sector undertakings.

Currently, the Vizag plant capacity has significantly dropped from its original 7 million tonnes, resulting in losses due to various issues.

Sources suggest that the value creation model would seek to double the plant's capacity to 15 million tonnes.

Commissioned in 1991 with an annual capacity of 3 million tonnes, the VSP was profitable between 2001 and 2016 but returned to losses around 2017 due to fluctuations in global steel prices, high interest burden, and increased raw material costs due to the lack of captive mines, leading to Rs 3000 crore additional expenditure annually. 

RINL reported losses of Rs 1,604 crore, Rs 1,263 crore, and Rs 1,369 crore from FY16 to FY18, respectively. In FY20 and FY21, the company reported losses of Rs 3,910 crore and Rs 1,012 crore.