Rashtriya Ispat Nigam Ltd (RINL), Visakhapatnam, is steering towards a new growth phase. The PSU is moving ahead with modernisation and upgradation to achieve a capacity of 7.3 mtpa in a couple of years. In an interaction with FE’s BV Mahalakshmi, P Madhusudan, CMD, said RINL is set to become a multi-unit company with a number of strategic initiatives being taken. The company is talking to NMDC for marketing steel products through its marketing network. Besides, it has joined hands with the Railways for setting up a forged wheel plant in Rae Bareli, UP. This R1,000-crore plant will be India’s largest and would substitute import of forged wheels by the railways. The unit is scheduled for completion by 2018. Excerpts of the interview:
Can you elaborate on the nature of possible tie-up with NMDC for marketing steel products?
It is too premature to comment on this. However, NMDC is setting up a new steel plant at Nagarnar and I foresee a good opportunity for both RINL and NMDC to leverage the synergy between both the companies, such as utilisation of RINL’s strong marketing network for marketing NMDC’s products from Nagarnar. While the thought process has begun, more mutual discussions are required and would be chalked out at an appropriate time. Also, we have a strategic initiative for laying a slurry pipeline from Nagarnar to Visakhapatnam, and setting up of a 6 tpa pellet plant at Visakhapatnam in a joint venture with NMDC is also taking shape.
How do you see the steel industry doing as the cost of production is increasing?
With imports going up from China, there is pressure on the industry to manage costs. The capacities in China have increased to over 800 million tonnes. Therefore, there is an overcapacity in China, and steel exports have increased by four-fold from China. We need to look at operational efficiencies as raw material cost constitutes about 60 to 65% for RINL. Hence, we are looking at new technologies such as pulverised coal injection (PCI), which can substitute high-cost coal with low-cost coal. We will be commissioning PCI in one of the furnaces this fiscal. When adopted in the other two furnaces as well, the savings would be to the tune of R450 crore annually at full potential operation of the furnaces. Optimisation of coal blend, maximisation of captive power generation, prudent fund management, and improvement in techno-economic parameters are some of the measures that we have taken to reduce the cost of production.
What kind of impact had issues like the power crisis on production and sales?
The production and sales were hit due to the severe power crisis in the state in the beginning of the financial year and also due to cyclone ‘Hudhud’ that struck Visakhapatnam in October. Also, the usual market pick-up in the second half of the fiscal is not visible this year and therefore a marginal growth is expected this year in liquid steel production, with a flat turnover. Production has been completely flat even while we see a price correction of 10-15%. Our turnover was about R13,500 crore. We are investing about R12,300 crore and hope to see 20% growth in 2015-16 when all the units are commissioned with 6.3 million tonnes of capacity. The cascading effect was a flat growth in turnover compared to the same period in the last fiscal that also led to a price correction.
Going forward, what are your strategies regarding modernisation and upgradation?
The existing 3 mtpa units are due for modernisation. Accordingly, we have chalked out a detailed modernisation plan to improve their efficiency of operation. The modernisation would also improve the energy efficiency, productivity and environmental performance. The modernisation of one of our blast furnaces has already been completed and the other furnace will be taken up in the next fiscal. Plans have been drawn for revamping our sinter plants, converters and rolling mills, and major orders have already been placed. The modernisation would increase production by a million tonne and the liquid steel capacity would reach 7.3 mtpa in the next couple of years. This will strengthen the position of the company as the market leader in bars and structural markets. We are also pursuing partnership through steel processing units.