Steel Executives’ Association Of Rashtriya Ispat Nigam Limited (RINL) met Minister of State for Steel, Faggan Singh Kulaste and requested him to consider the merger of RINL with Steel Authority of India Limited. The content of the letter is given below for the benefit of the viewers of www.indianpsu.com –
Sri FalganSingh Kuleste ji,
Honorable Steel (S)
Government of India.
Subject:- Request for Strategic Merger of Steel Sector – RINL-SAIL
Greeting from Steel Executives Association (SEA), RINL Recent initiatives of GoI, lead by our Hon’ble Prime Minister Shri Narendra Modi, like enhancing Budget allocation to infrastructure for Railways, National High Ways, Ports, Housing sector, and low interest rates for Housing loans etc., are helpful for the growth of Steel Sector.
RINL/Vizag Steel, one of the best steel plant, started its journey as part of SAIL till 1982. RINL formed in the year 1982 as separate entity. Unfortunately, captive iron ore mines were not allotted to RINL at that time. SAIL retains the mines reserved for Vizag steel. Since then RINL has been suffering due lack of Captive Iron ore & Coal mines. RINL’s raw material cost is 63% of total cost where as that of SAIL’s & TATA’s is 48% & 35% respectively (both companies have their captive mines).
RINL is losing about 1500-2000 crores per annum exclusively on account of lack of iron ore. Though, RINL has been performing well, only on account of high input cost on material, our net Profit has become negative for the last 4 years, added to that huge barrowings (nearly Rs 20,000 Cr) from market to increase the plant Capacity as per GoI plan.
As per the recent reports, for H1 2022-23 SAIL cost of production is Rs 62,062 per ton of steel compared to RINL production cost 68,218. This is lower than Rs 6,156 per ton. RINL production cost includes high interest burden of Rs 4,151 (around 8.5% rate taken for expansion) and depreciation of Rs 3,620 ( due to additional
expansion of 4.2 million tons as per GOI national steel policy (NSP). Another major reason for high cost of production in RINL is low utilization of machinery as RINL could run at less than 4 million ton capacity. If RINL is remerged with SAIL, RINL cost of will be much lower than SAIL units and will benefit to the government and nation.
RINL financial position got deteriorated and with a heavy loan burden of Rs 20000 crore, company is struggling to meet its ends. A Steel plant with high productivity and modern technology as its strength, needs your urgent attention and it is pertaining mention that RINL has registered PBT of RS 942 Cr during FY 2021-22 is a good sign of improvement.
Strategic Merger : At this juncture, Strategic remerger of RINL-SAIL as a single entity, all under the Ministry of Steel control, can work as synergy. A single Maha Steel Unit be formed by merging, steel plants of Steel Authority of India Ltd (SAIL) & its subsidiary units with Rashtriya Ispat Nigam Ltd and its subsidiary company.This Mega Steel merger also in line with the recommendations of parliament committee for PSUs submitted in the month of March 2013 shall be able to expand further steel capacities. This shall greatly help to realize the targets of National Steel Policy of 300MTPA steel capacity by 2030-31. Each of steel units has its strengths and weaknesses, but merger of them into single unit would help them to synergize their strengths and turn the weaknesses into opportunities and overall benefits to Nation. Steel being an essential component in the growth rate and contributes heavily to the GDP of our country, it should be kept under Strategic Sector of the Nation.
The bigger entity of RINL-SAIL can also be able to compete internationally. With “Make in India” concept this merger will pay back large dividends to Government and Nation.
At this juncture, Steel Executives’ Association humbly requests you to take this steps to save Steel sector as a whole. Sir, we strongly believe that under your dynamic leadership, steel sector will bounce back. The RINL employee fraternity will be grateful to you and your kind office.
With Warm Regards