Chief Minister Y.S. Jagan Mohan Reddy on Saturday wrote to Prime Minister Narendra Modi requesting him to reconsider the Centre’s proposal to divest its stake in Visakhapatnam Steel Plant (VSP) and explore other opportunities to put it back on track.
Mr. Jagan said that the in-principle approval given by the Cabinet Committee on Economic Affairs for 100% strategic sale of the Union government’s stake in VSP was a cause of concern for the public.
He pointed out that the VSP was India’s first shore-based integrated steel plant which gave direct employment to about 20,000 people and it was a dream come true after many sacrifices were made by the people. Thirty-two people had died during the campaign for its establishment.
The Chief Minister said the VSP had posted a good performance between 2002 and 2015, during which period it had a positive net worth. The plant had achieved a turnaround in 2002 after being referred to the Bureau for Financial & Industrial Reconstruction as a sick company.
VSP has around 19,700 acres of land, whose valuation exceeds ₹1 lakh crore. VSP currently has a capacity of 7.30 million tonnes and has taken up modernisation and capacity expansion recently. It was due to the unfavourable global steel cycle that the VSP incurred losses since 2014-15, and it was struggling to service its debt.
One of the major structural issues that led to high cost of production was the absence of captive mines, which affected profitability. Mr. Jagan suggested that the Centre take the following measures for the revival of VSP: continuing operations for a further period of two years to achieve a turnaround, providing captive iron ore mine to reduce input costs, and restructuring both long and short-term loans.
The Andhra Pradesh government would closely work with the Centre under the PM’s leadership for reviving the public sector steel giant thereby unlocking its great value Mr. Jagan assured.
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