The proposed merger of Indian government-run steel producer Rashtriya Ispat Nigam Limited (RINL) with Steel Authority of India Limited (SAIL) is back on the table at the ministry of steel following the changed political situation in the country, government sources said on Wednesday, June 26.
The sources said that the merger proposal is being spearheaded by the Steel Executives Federation of India (SEFI) and the Confederation of Officers Associations in Central Public Sector Undertakings (NCOA), representatives of which met the new minister of steel, H D Kumaraswami, to give a renewed push to the RINL-SAIL merger plans.
The sources pointed to the changed political situation in the country with a new government at the centre and also in the state of Andhra Pradesh where RINL’s 7.3 million mt per year steel mill is located.
Officials said that, since the political party heading the new state government in Andhra Pradesh is also a crucial ally of the new coalition government at the centre, and with Andhra Pradesh state aggressively pushing for a merger, the ministry of steel is in a more favourable mood to consider such a strategic move.
The previous national government approved the privatisation of RINL as a solution to the latter’s acute financial stress and inability to even provide for working capital to source critical raw material. However, the privatisation move was put on the backburner ahead of the recently concluded national elections.
Previously, the board of RINL had mooted a merger with SAIL, but this then had not found any support from the ministry of steel.
As the only large steel mill in the country without any captive iron ore or coal mine, RINL has faced major challenges on the cost front and its raw material costs are about 63 percent of the cost of finished steel compared to 48 percent for SAIL and 35 percent for Tata Steel, steel sector analysts said. They said that SAIL with its captive coal and iron ore mines will ensure a strategic advantage for RINL, while the latter with its exclusive long product producing mill offers an expanded product portfolio to the former.