A New Hope with TDP in Power
The Telugu Desam Party (TDP), a key ally of the NDA government, may play a crucial role in unlocking the value of Rashtriya Ispat Nigam Ltd (RINL) in Visakhapatnam. The Union Cabinet approved the privatization of RINL in December 2021, but the process stalled due to opposition from the then-ruling YSRCP government in Andhra Pradesh.
With the TDP back in power, the prospects for RINL's revival have improved. The TDP has expressed its willingness to cooperate with the central government to achieve the best possible outcome for the company. This positive stance has led to several meetings between Andhra Pradesh government officials and Union Steel Minister H.D. Kumaraswamy.
The focus of the new plan is on "value creation," aligning with the central government's priorities for enhancing public sector undertakings. The plan aims to double the plant's capacity from its current 7 million tonnes to 15 million tonnes.
RINL, commissioned in 1991 with an initial capacity of 3 million tonnes, enjoyed profitability between 2001 and 2016. However, it faced losses from 2017 onwards due to various factors, including fluctuating global steel prices, high interest burden, and increased raw material costs. The lack of captive mines resulted in an additional expenditure of Rs 3000 crore annually.
RINL reported losses of Rs 1,604 crore, Rs 1,263 crore, and Rs 1,369 crore from FY16 to FY18, respectively. The losses continued in FY20 and FY21, amounting to Rs 3,910 crore and Rs 1,012 crore, respectively.
The TDP's return to power offers a glimmer of hope for RINL's revival. With the government's focus on value creation and capacity expansion, RINL may finally turn the corner and return to profitability.