If all goes well, the erstwhile, undivided district of Visakhapatnam could become the largest steel manufacturing district in the country in the near future.
The largest integrated and shore-based steel maker, Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant, a fully-owned public sector unit, is already based in Visakhapatnam city and soon ArcelorMittal Nippon Steel India Private Limited (AM/NS India), a private entity, is poised to set up one of its largest steel plants in Rajayyapeta, now in Anakapalli district post trifurcation of Visakhapatnam district.
RINL already has the capacity to produce 7.3 million tonnes of steel per annum and AM/NS is ready to set up its 7.3 MTPA unit in the first phase and scale up by another 10.5 MTPA, in the second phase.
Both plants combined, in their full capacity, will be in a position to produce close to 25.10 MPTA, which could be the largest in any district in India — Visakhapatnam district, though, has been split into Visakhapatnam, Anakapalli and Alluri Sitharama Raju districts.
Experts from the steel sector and former senior executives of RINL say that RINL has enough land to scale up its production from 7.3 MTPA to 20 MTPA, which could further increase the output and play a key role in India’s target of making 300 MTPA per annum by 2030.
Many issues
But achieving this distinction, hinges on many things. Primarily, it depends on the political will and the efforts put in by the ruling NDA government both at the State and in the Centre.
RINL is in red for multiple reasons, and the Union Government had already proposed for its 100% strategic sale in January 2021. But stiff resistance from the employees and trade unions played a deterrent role and no buyers had come forward.
Finally, the Centre, coming under pressure, announced a bailout package of ₹11,440 crore for RINL in January this year.
However, the bailout package is not sufficient for the debt-strapped RINL and the alternatives that are being discussed are primarily merger with Steel Authority of India Limited (SAIL) or leasing out captive iron ore mines to the PSU, which has been eluding it for the last 30 years.
Minister of State for Steel B. Srinivasa Varma ruled out the merger of RINL with SAIL for the time being. The board of SAIL refused the merger idea owing to the debts of the VSP. Merger could be considered only when it would become free of debts and profitable, he said..
However, speaking to The Hindu, former independent director of SAIL Kasi Viswanatha Raju said, “Merger with SAIL is on the cards and it cannot be ruled out. There are a few technical issues, which have to be ironed out. Merger is the only better alternative and a win-win for RINL, SAIL and the government.”
According to him, apart from debts, the major technical issue is that RINL is a fully-owned PSU while SAIL is a listed company.
Cost-cutting mode
Firstly, the balance sheet of RINL had to improve and for that the PSU was already into a cost-cutting mode. It had announced VRS and was in the process of reducing the excess force of contract labour, he said.
“It has even removed the CISF from its security. Earlier, for every constable of CISF, the plant was paying about ₹90,000 per month. Now they are in talks with the State’s SPF (Special Protection Force), wherein the cost of one SPF constable will be ₹30,000 to ₹40,000. A bailout package has been given and Steel Minister Kumaraswamy has promised another big package soon. This should improve the balance sheet of RINL and help SAIL go for the merger,” Mr. Raju explained.
If SAIL took over RINL, the total raw material purchase cost of RINL would come down by ₹5,000 to ₹6,000 per tonne, he added.
Captive mines
According to Ch. Narasinga Rao, State secretariat member of CPI(M) and one of the chairpersons of the Visakha Ukku Parirakshana Porata Committee (the umbrella body that led the anti-privatisation movement), whether SAIL would take over or not, RINL could be revived only if the government leased a few iron mines to the plant. “If mines can be allotted to AM/NS, a plant which is yet to come up, why can’t they be given to a 30-year-old PSU that has been pitching for mines since its inception? The moment mines are allotted, its raw material expenditure will come down by at least ₹5,000 per tonne,” he said.
‘’Despite issues like merger with SAIL, allotment of mines, clearing of debts with bailout packages and pulling it out of the debt crisis, RINL is the pride of A.P. and it has been restored to full production of 7.3 MTPA,’‘ opine the members of Steel Executive Association of RINL.
‘’If RINL is fully functional and AM/NS comes up, then nothing can stop Visakhapatnam-Anakapalli from becoming the hub for steel making in India,’‘ is the view being expressed by stakeholders.
‘’Most importantly, both plants can work parallelly without harming each other’s interests and make A.P. and the districts proud,’‘ they said.
Different products
As per sources in the VSP and AM/NS, the products of both plants are different and the markets are also different.
While RINL manufactures long products such as channels, angles, wire rods, rebars and beams, AM/NS reportedly will manufacture flat products such as plates, sheets, HR coils, CR coils and crude steel.
‘’Both plants together can cater to all the products in the steel industry,’‘ said a senior executive in RINL.
‘’This will not only be the steel making hub, but if things fall in place for RINL and AM/NS, both the districts will develop and employment, both direct and indirect, could cross over one lakh. AM/NS will be investing around ₹1.47 lakh crore and the State Government has already allotted 2,200 acres of land,’‘ said Mr. Viswanatha Raju.
Published – April 21, 2025 09:32 pm IST