‘Steel Plant Set To Make Profits Again’

Rashtriya Ispat Nigam Ltd., the corporate entity of Visakhapatnam Steel Plant, is hopeful of returning to the cash profit zone this fiscal, on the back of improved demand conditions, said chairman-cum-managing director P. Madhusudhan.

“There is an uptick in the demand situation of steel... we are sensing an appetite for consumption and if this is sustained, then we hope to become EBIDTA positive this fiscal and make cash profit by 2018-19,” he said at a press meet here on Monday.

India’s first shore-based integrated steel plant, the public sector RINL, made losses for two consecutive years in 2015-16 and 2016-17. Totalling ₹2,657 crore, these losses came after a continuous 12-year profit making stint since 2002-03. He said that product prices, which were lowered in the wake of the disruptions due to GST roll-out, had been increased again in August but sales were good.

While there has been a 10% growth in RINL’s saleable steel production between April and July 2017, turnover increased by 27% to ₹3,915 crore in this period. RINL is in the last stages of implementation of a ₹12,300-crore expansion programme which doubles capacity to 6.3 million tonnes. Capacity will increase by another 1 million tonnes to 7 million tonnes by 2019-20, once a ₹4,000 crore modernisation plan is completed. These are being run concurrently, with 80% of the project cost being raised through internal resources and the remaining through bank loans. RINL’s debt stood at ₹16,000 crore at July-end.

Mr. Madhusudhan said that to boost productivity, the company had frozen manpower recruitment other than for critical requirement. “RINL’s manpower costs comprised about 18% of its production costs – we want to bring it down to around 12%,” Mr. Madhusudhan said.