Several trade unions and political parties are planning to hit the road against the ongoing efforts of South Korean steelmakers Posco and Hyundai to enter into a joint venture with Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant.

Though a final decision is awaited by the project proponents and a green signal is yet to come from the Ministry of Steel, the proposed tie-up is snowballing into a major controversy as trade unions feel that this will open the door to privatisation of the steel plant.

Separate visits by high-ranking officials from the two South Korean companies, accompanied by diplomats, have raised the hackles of union leaders — who at a roundtable decided to organise a massive demonstration on July 27 and later march to Delhi to submit their memorandum to Prime Minister Narendra Modi and Union Steel Minister Dharmendra Pradhan.

Bringing in FDI

Sources told The Hindu that on the invitation of the Prime Minister’s Office, the first team of officials led by the Ambassador of South Korea visited RINL in October last year.

Sources said that the PMO, which is keen on attracting foreign direct investments (FDI), feels that the proposal will help bring in significant revenue if the 3,000 acres of surplus land of RINL is offered to set up a high-end steelmaking unit for the automobile industry either by Hyundai or Posco. The proposal was to invest ₹30,000 crore in a greenfield steel plant with a capacity of 3-5 million tonnes. Land owned by RINL will become its equity if the joint venture materialises.

“We will not allow the joint venture to take off as it will put RINL’s future in jeopardy. It will also strengthen our privatisation fears. We want RINL to mobilise funds on its own from banks and others and go ahead with its expansion project on the surplus land,” RINL-recognised union president J. Ayodhyaram told The Hindu.

Disinvestment decision

RINL is already in the list of PSUs identified for disinvestment. It is going through a slump by incurring net losses for the past four years barring last year due to import of cheap steel, decline in construction activity and other factors.

“Merchant bankers appointed for 10% offloading of equity in 2012 had valued RINL’s machinery and land at ₹25,000 crore. We have a land bank of 26,000 acres and each acre will cost around ₹10 crore as per the market value. This is a classic instance of undervaluation,” said INTUC leader Mantri Rajasekhar.