RINL Ferro Alloy Issue: Unions Cry Foul, Demand FIR Against Top Officials and CAG-CVC Audit
Unions allege major financial losses from poor-quality ferro alloys, abnormal consumption and failure of senior management to act
Unions at Rashtriya Ispat Nigam Limited’s (RINL) Visakhapatnam Steel Plant (VSP) have demanded an immediate CAG/CVC audit of ferro-alloy procurement over the past five years, registration of an FIR against the supplier along with officials found responsible, and an independent probe into the role of senior management.
The demands follow the issues raised in the ongoing SMS blast investigation and focus on what the unions describe as the cascading financial impact of allegedly poor-quality ferro alloys, including excessive consumption, higher cast costs, additional energy consumption and increased slag generation.
Ferro-alloy consumption allegedly more than doubled
According to the unions, consumption of manganese-based ferro alloys during June 4–11 rose sharply while producing a roughly 150-tonne rebar-grade heat.
The unions claim consumption reached approximately 2.4–2.6 tonnes per heat, compared with the normal requirement of around 1.2 tonnes per heat.
They further claim that after the supplier was changed and ferro alloys were sourced from SAIL and other suppliers, consumption fell to approximately 1.2–1.3 tonnes per heat.
The unions said internal quality reports indicated that the earlier material contained only around 30% actual ferro alloy, with the balance allegedly consisting of oxides and moisture.
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They argue that the sharp difference in consumption before and after the supplier change warrants a detailed independent investigation.
Unions claim cast cost nearly doubled
The unions have estimated that the abnormal ferro-alloy consumption significantly increased the direct cost of producing each heat.
According to their assessment, with normal consumption of around 1.2 tonnes per heat, the direct cast cost was approximately ₹1.5 lakh per heat. With consumption reportedly rising to around 2.6 tonnes, the cost allegedly increased to nearly ₹3 lakh per heat.
The unions stressed that this represents only the direct cost impact.
They said the overall financial impact could be substantially higher after accounting for additional energy consumption, excess slag generation, process losses and other cascading production costs.
On this basis, the unions have alleged that the cumulative loss to RINL could run into hundreds of crores of rupees, and have called for an independent financial assessment to establish the actual figure.
Questions raised over senior-level accountability
The unions have questioned why the sharp increase in ferro-alloy consumption did not trigger timely corrective action by the SMS, Quality Control and Procurement departments.
They have also questioned whether action taken following the incidents adequately addressed responsibility at senior levels.
According to the unions, the Head of the SMS Department continued in position, while the Head of Quality Control during the relevant period was transferred to another technical department. The official handling procurement was also transferred.
The unions have therefore demanded an examination of the role of senior management, including the Director (Operations), Director (Commercial), Director (Finance) and CMD of RINL, as well as concerned officials in the Ministry of Steel.
The unions stressed that the purpose of the inquiry should be to establish responsibility based on records and decision-making authority rather than to presume guilt.
Why did Finance not flag the abnormal consumption?
The unions have specifically raised questions about the role of the Director (Commercial) and Director (Finance) in the procurement and payment process.
They pointed out that payments to ferro-alloy suppliers involve commercial and financial scrutiny, including checks relating to quality acceptance, purchase-order conditions and consumption norms.
The unions have asked why a reported increase in consumption from approximately 1.2 tonnes to 2.6 tonnes per heat did not trigger a financial or commercial red flag.
They have also demanded that the investigation establish when the abnormal consumption became known, which officials were aware of it, what action was taken and whether procurement or payment processes were reviewed after the increase became apparent.
Unions seek five-year audit of ferro-alloy procurement
The unions have demanded a comprehensive CAG/CVC audit covering the last five years.
They want the review to examine:
- Procurement of ferro alloys and supplier selection;
- Purchase orders and contractual specifications;
- Quality-test and acceptance records;
- Consumption norms and actual consumption;
- Payments released to suppliers;
- Supplier performance and material rejection records;
- Abnormal consumption patterns;
- Additional energy and process costs;
- Excess slag generation and associated losses; and
- The role of officials involved in procurement, quality acceptance, consumption monitoring and payment approval.
The unions said such an audit would help determine whether the issue was an isolated quality failure or reflected a wider systemic problem.
Three key demands
The unions have placed three principal demands before the management and authorities.
First, they want a CAG/CVC audit of all ferro-alloy purchases at RINL for the past five years, covering procurement, quality, consumption and financial impact.
Second, they have demanded an FIR against the supplier and officials found responsible if the investigation establishes that substandard material was knowingly accepted, cleared or used despite evidence of irregularities.
Third, they have demanded an independent investigation into senior-level accountability, including the roles of the Director (Commercial), Director (Finance), CGM Works and Head of SMS, with suspension pending inquiry as sought by the unions.
“Accountability must start from the top”
The unions have argued that the ferro-alloy issue should not be treated merely as a routine quality dispute.
They contend that abnormal consumption, if established, could have had implications extending beyond the cost of the ferro alloy itself, affecting production costs, energy consumption, slag generation and overall plant efficiency.
The unions have also questioned why senior executives were not subjected to similar scrutiny despite the reported consumption pattern and other incidents at the SMS.
They said responsibility should be established at every level where procurement, quality acceptance, consumption monitoring and financial decisions were taken. “If RINL is to be saved, accountability must start from the top, not the bottom,” the unions said.
The allegations and loss estimates raised by the unions require verification through an independent investigation and examination of RINL’s procurement, quality, production and financial records. RINL and the concerned officials would have an opportunity to respond to the allegations.
