The Centre is giving a fresh lease of of life via cash support to some central public sector enterprises (CPSEs) to let them stay afloat, even as the strategic sale policy is put on the backburner.
With less appetite for privatisation, the Narendra Modi 3.0 government’s approach towards public capital management is now “holistic,” sources said.
Take the case of RINL, also known as Vizag Steel, whose privatisation plan was hanging on fire for over three years after the Cabinet decided in February 2021 that the government must exit the firm in line with the new public sector enterprise policy which considers steel manufacturing to be a non-strategic sector.
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With the recent return of the Telugu Desam Party (TDP) in Andhra Pradesh and to the ruling alliance at the Centre led by the Bharatiya Janata Party, the Modi government is giving it a shot to revive the fortune of the company.
TDP, which otherwise pushes for a public-private partnership model for the development of the state, has opposed the privatisation of the plant. The plant is struggling due to a lack of captive mines for iron ore and coal, cyclic markets and the liquidity crisis.
The Centre has already infused Rs 1,600 crore into the steel plant in the last two months including Rs 500 crore in equity and Rs 1100 crore in working capital loans to keep it afloat. The government is now working on a package of Rs 15,000-20,000 crore for the steel maker that would involve fresh equity infusion and fresh working capital loans by the Centre along with restructuring of bank loans, sources said.
People aware of the goings-on in the plant are sceptical about the revival of the plant that lacks captive mines, which inflate input costs due to purchases from the open market, besides legacy issues. Its net worth has fallen to just Rs 391 crore in FY23 from a high of Rs 13,659 crore in FY12, due to the accumulation of losses over the years.
Like Neelachal Ispat Nigam Ltd (NINL) bought by Tata Group in January 2022,
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