RINL seeks EoI to swap products for funding working capital

The Ministry of Steel had observed that there is a possibility that the company may be going into insolvency in the near future. The principal products of VSP include steel products comprising re-bars, wire rods, rounds structural, blooms, billets and pig iron

Visakhapatnam: In a first of its kind, to tide over the raw material crisis and raw material crunch affecting optimum utilisation of its production capacity, Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), has sought Expression of Interest (EoI) from interested parties for funding working capital/raw materials against supply of steel.

In a notice issued, the Visakhapatnam-headquartered public sector, which is under the process of strategic disinvestment by the Union Government, RINL said they are looking for a prospective party for coming to an understanding on mutually acceptable terms. The principal products of VSP include steel products comprising re-bars, wire rods, rounds structural, blooms, billets and pig iron.

RINL is facing worst-ever crisis now due to working capital crunch and raw material shortage forcing it not to run the mills to achieve full rated capacity. It is also said that the Ministry of Steel had observed that there is a possibility that the company may be going into insolvency in the near future. RINL is the only major steel-producer without captive iron ore and coking coal mines.

The EoI notice stated that RINL is looking to partner with companies having interests in steel and steel-making raw materials and invites business proposals for supply of steel from RINL. It says the potential partner may participate by way of supplying one or more key raw materials (like coking coal /BF coke, iron ore) and in turn take steel products as per mutually agreed terms and conditions.

RINL will engage with potential partners to evolve a business model and finalise related terms and conditions. The EoI respondents should be in the business of steel or steel-making raw materials. The last date to submit offers is April 5.

The decision evoked a mixed reaction. D Adinarayana, AITUC general secretary and recognised union leader told Bizz Buzz that the proposal is not acceptable to them as it will not serve the interest of RINL in any manner. He said the move if implemented will not help RINL in making profit.

He said RINL’s production which was 5.2 million tonnes two years ago has fallen to 3.2 million tonne due to lack of proper planning and patronage from the Centre. On the other hand, an office-bearer of Steel Executives’ Association welcomed the move and said to optimise production and overcome raw material crisis, this is a viable option.