The firm statement by Union Finance Minister Arun Jaitley to set a time frame for disinvestment of Central Public Sector Enterprises notwithstanding, the slump in market may help Rashtriya Ispat Nigam Limited (RINL) in getting spared at least in the new financial year from becoming a listed company.
With cheap steel flooding the domestic market and RINL, the corporate entity of Visakhapatnam Steel Plant may also not get good response if IPO is floated as it is expected to incur net losses for the second consecutive year in a row in 2016-17.
The navaratna company, which incurred a net loss of Rs. 1421 crore in the last fiscal, is expected to narrow down its losses due to increase in sales during last part of the current financial year.
Senior officials of the company as well as trade union leaders feel that the company is now at a crucial stage amid a stepped-up campaign for merger of RINL with National Mineral Development Corporation (NMDC) as a mutually beneficial option. While RINL is known for its experienced manpower as well as a land bank of 25,000 acres, NMDC has interest to diversify into steel making. NMDC owns several mining blocks in Chattisgarh.
“Instead of disinvestment, I strongly feel merger will be a wise option. It will also facilitate the company to go ahead with its corporate vision to become a 20 million tonne company,” former Chairman and Managing Director of RINL Y. Siva Sagar Rao told The Hindu .
RINL which recently completed 6.3 million tonne expansion with an investment of Rs. 12,300 crore, is undertaking capital repairs and modernisation of blast furnaces and critical equipment with an outlay of Rs. 4,000 crore to increase its capacity further by one million tonne.
Disinvestment of RINL, proposed long ago, was aimed at offloading 10 per cent of the government’s equity in the company. It could not be taken up even after notification due to volatility of the market after UBS Securities India and Deutsche Equities India were appointed the merchant bankers.
“The Steel Ministry has already promised that captive iron ore mines will be granted by March 31. We are also pursuing the merger with NMDC. Hence, at this time we don’t expect that the government will go ahead with disinvestment,” RINL recognised union Visakha Steel Employees’ Congress general secretary Mantri Rajasekhar said.