RINL secures LoC deal with Tata Intl for raw material procurement

• VSP is also in talks with SAIL for supplying iron ore and manufacturing steel under SAIL’s brand name
• Talks between RINL, NMDC to give RINL a lump-sum amount for leasing its surplus lands have not yet yielded positive results

Visakhapatnam: Rashtriya Ispat Nigam Limited, the corporate entity of Visakhapatnam Steel Plant, which is exploring various options to improve its financial health and reduce its debt burden, has been successful in implementing an understanding on getting support to purchase of raw material through Letter of Credit (LoC) from Tata International Limited (TIL).

TIL is a prominent trading and distribution company with a presence in manufacturing and supply chain integration in various businesses.

A RINL official when contacted told Bizz Buzz that their association to get the raw material has evoked an encouraging response. TIL will pay for the procurement of raw material at around 5 percent interest. It is said that the company will facilitate acquisition of raw material from various agencies with a condition that the amount paid by TIL is paid back within a stipulated time. Visakha Ukku Parirakshana Porata Samiti co-chairman D Adinarayana said the management is holding talks with Steel Authority of India Ltd (SAIL) for supplying iron ore and manufacturing steel and sell the finished product under its brand name so as to ensure all the blast furnaces of VSP are utilised fully. At present, working capital crunch and raw material insecurity, RINL is not operating all its blast furnaces.

VSP, India’s first shore-based integrated steel plant has a production capacity of 7.3 million tonnes per annum. The company is estimated to have suffered a loss of about Rs 3,000 crore during 2022-23 due to heavy interest liability on loans borrowed for expansion in the past and huge expenditure incurred on sourcing iron ore and coking coal. It is the only major steel producer in India, which is deprived of captive mines. All other big manufacturers including SAIL, TISCO and Jindal have captive mines.

Sources said the talks with NMDC, which is also under the Ministry of Steel, to give a lump-sum amount to take RINL’s surplus lands at the main plant on lease to set up a pellet plant has not yet yielded positive results. The unions are supporting talks with SAIL and NMDC as both are in the public sector. “We wholeheartedly support talks for strategic partnership with SAIL and NMDC through mutually agreeable agreement,” INTUC leader Neerukonda Ramachandra Rao said.

As part of monetisation, RINL has already launched an exercise for selling 588 plots spread over 45 land parcels measuring 22.90 acres in HB Colony near Maddilapalem here and the forged wheel plant it set up on the land belonging to Railways in Rae Bareli in Uttar Pradesh. While the land auction is expected to fetch Rs 1,000 crore, RINL is hopeful of getting Rs 2,000 crore from sale of the forged wheel plant. The plant has a capacity to produce 1 lakh forged wheels per annum with a provision to expand it to 2 lakh wheels. BJP MP and member of Parliamentary Standing Committee on Finance GVL Narasimha Rao said the Centre is keen on monetisation so as to help RINL wriggle out of the current mess. He said strategic disinvestment of RINL has been put on hold to explore various options to put the public sector unit back on the right track.