RINL defends deal with Jindal on 3rd furnace

Bottleneck In Production Line

• Steel plant’s annual production capacity is 7.3 mn tonne
• Full capacity is not being utilised properly
• It’s due to heavy interest burden and spiralling prices of raw materials
• VSP had to spend Rs16,300 cr on expanding capacity from 3MT to 7.3MT in multiple phases

Visakhapatnam: Pooh-poohing criticism over MoU signed with Jindal Steel and Power Ltd (JSPL) to operate the third blast furnace, the management of Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), has justified the decision and described it as a turning point in increasing the production.

RINL steel plant annual production capacity of 7.3 million tonnes per annum is not being utilised properly for want of heavy interest burden and spiralling prices of raw materials. RINL is the only major steelmaker deprived of captive mines unlike SAIL and TISCO. The company had to spend nearly Rs16,300 crore on expanding capacity from three million tonnes to 7.3 million tonnes in multiple phases.

During an interaction with the representatives of various trade unions, which marked by impromptu protests by several trade unions, Atul Bhatt, Chairman and Managing Director of RINL, said that company successfully signed an MoU with JSPL for ensuring the much needed working capital support for raw material requirement for starting and operating the BF-3, which is planned for blowing-in on December 30 at a capacity of two lakh tonnes of hot metal per month.”

The unions alleged that the deal lacked transparency as they were not taken into confidence before taking such a decision. They also found fault with the management for entering into an understanding with JSPL in a secret manner at a time when the company was holding negotiations with State-owned SAIL and industry major TISCO for a tie-up.

“The entire deal smacks of corruption. All the unions are opposed to it and will agitate till the deal is scrapped,” INTUC leader and Visakha Steel Employees’ Congress president Neerukonda Ramachandra Rao told Bizz Buzz.

Scoffing at criticism, the management said the arrangement with JSPL will ensure availability of about Rs800-Rs900 crore for RINL in the form of working capital advance/raw materials required for consistent operation of BF-3, against which RINL will be supplying about 90,000 tonne of cast blooms every month from Steel Melting Shop-2 (SMS-2) of RINL.

“This arrangement with JSPL will enable RINL to generate additional revenue from increased sales of about one lakh tonnes of saleable steel even after supply of committed quantities to JSPL. This initiative will result in the monthly increase of sales turnover by around Rs500 crore per month and is likely to reduce losses by about Rs50-Rs100 crore per month,” the company contended in a statement.