In a bid to turn the loss-making, debt-ridden PSU, RINL profitable, the Steel Ministry is planning a piecemeal disinvestment of the CPSE. Under the current revival plans, the Ministry of Railways is seen as a possible front-runner to “takeover the land” (at a yet to be agreed valuation) while a proposal has been mooted to outsource operations of the forged wheel plant of RINL to another PSU major, SAIL (Steel Authority of India Ltd), if not private players.
Both RINL (Rashtriya Ispat Nigam Ltd) and SAIL are CPSEs under Ministry of Steel.
Incidentally, the Ministry of Railways has given an “in-principle approval” for taking over the land, as per an internal note of one of the Ministries, which has been accessed by businessline.
The proposal, so discussed, included the Railways seeking land from RINL, following which the Ministry also takes over the forged wheel plant without an off-take agreement. Operations of the plant is then outsourced to SAIL.
“No objection from CRB (Chairman of Railway Board) for land and off-take,” a note mentions adding that a previous meeting between the Ministries had taken place too.
“The roadmap to take over ..... MoR seeks land from RINL.... MoR takes over plant without off-take agreement,” the internal note mentions while pointing out that a follow up with the Chairman of Railway Board (CRB) will be carried out in October.
Takeover of forged wheel plant has been agreed by CRB in principle, said an official aware of the discussion. However, valuation is yet to be done.
RINL, in a response to queries by businessline denied such proposals - sale of land or outsourcing of forged wheel plant – being under consideration. However, the company clarified that the forged wheel plant was operational.
Approval by CGD
Earlier this year, the Core Group of Secretaries on Strategic Disinvestment (CGD) had approved the disinvestment of the forged wheel plant of RINL as a “going concern” while observing that such a move “... would facilitate the disinvestment process (of RINL) and may realise a better price for the entity”. Also the sale of approximately 24 acres of non-core surplus free hold land owned by RINL has been approved.
The forged wheel plant has already seen an investment of over ₹2,250 crore.
Although the initial orders of around 2,000 wheels have been delivered in FY23, “the plant is unable to operate at full capacity due to several reasons” it was noted earlier this year during the CGD meeting.
Issues with RINL
Issues include RINL’s financial constraints, lack of experience in forging operations etc.
It noted that there was “little scope for raising further resources” (by RINL); which made monetisation of 24 acres of non-core surplus land at Visakhapatnam as one of the options.
Some officials present said, proceeds from sale of forged wheel plant and surplus land may be utilised for retiring ₹1165 crore debt of the unit (that is there on its books).
The Cabinet Committee on Economic Affairs (CCEA) had on January 27, 2021 granted ‘in-principle’ approval for complete disinvestment of Gol shareholding in RINL, along with RINL’s stake in its subsidiaries and joint ventures.