RINL set to make profit after two difficult years: CMD

The Rashtriya Ispat Nigam Ltd - Visakhapatnam Steel Plant is all set to turn a new leaf and make operational profits by the end of the current financial year after two or three particularly difficult years, according to Chairman and Managing Director P. Madhusudan. He was reviewing the performance of the plant during the current financial year at a media conference here on Friday. He said the steel plant had recovered well in the current financial year (2017-18), after two difficult years due to the market slowdown and contingencies such as the Hudhud cyclone.

He said, "We have achieved turnaround during the current fiscal after hitting the recovery path in 2016-17. We have reduced the net loss by Rs 400 crore to around Rs 900 crore and we expect to achieve break-even and a nominal operational profit of Rs 100 crore or so by the end of the current fiscal. We expect 2018-19 to be a good year."

Madhusudan said RINL had successfully completed its expansion project (doubling the original capacity to 6.3 mt) and added an additional million tonnes by taking up a modernisation project, taking the total capacity to 7.3 mt. "We have met the entire cost of Rs 16,000 crore for expansion and modernisation through internal accruals and loans. There is no budgetary support, " he said.

Madhusudan said coal and iron ore prices had gone up in the past few months, pushing up the cost of production. But the plant's performance was good on all fronts. He admitted that the steel plant's efforts to acquire captive iron ore mines had not made much headway in the past few years. However, the AP government had agreed to allot iron ore mines in West Godavari district and a joint venture would have to be formed to exploit the mines. In response to a query, he said the quality of iron ore in the West Godavari mines was good. However, RINL’s efforts to get captive iron ore mines in Odisha and Rajasthan had met with little or no success so far. "One problem is that the allotment of mines is a state subject and most states want value addition at the pithead and that is why it is becoming so difficult for us to get captive iron ore mines," he explained.

He said all the new units were performing well and "we now have a robust steel plant with a capacity of 7.3 mt." In response to a question, he said it was the Centre’s decision when the disinvestment of RINL should be taken up. It was originally proposed to disinvest 10 per cent of the stake, amounting to roughly Rs 490 crore. He said RINL had in the current year taken up coastal shipping of products to Kochi, Mumbai and Ahmedabad.

In response to a query, he said the AP government was using its steel products in construction works in the new capital, Amaravati, and the Polavaram irrigation project on the Godavari. "However, we produce only long products and they need mostly flat products. Of the long products used in construction, we are getting the lion's share," he said.

With regard to CSR (corporate social responsibility) funds, he said RINL had been spending Rs 8-10 crore per annum on CSR projects during the past two years. "CSR spending is mandatory only when we make profits, but we are doing it even when we make losses," he explained. He concluded that bright days were ahead, as market conditions were improving and the outlook was bright on many fronts. "RINL will play its part in the building of a new Andhra Pradesh as the biggest industrial unit in the state," he added.

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