The Rs 3,441 crore Rashtriya Ispat Nigam Ltd (RINL) has decided to put off its modernisation plan till 2003. B N Singh, chairman and managing director (CMD) said the decision was due to the unstable market condition and the cost of money involved.
RINL's turnaround proposal, which includes write-off of accumulated losses, is still pending approval with the steel ministry and is not expected before 2003.
The Disinvestment Commission had recommended a selloff of not less than 51 per cent in RINL to a strategic partner, however, no progress has been made in this case.
Singh said the status of disinvestment is dormant. "The plant will have to be spruced up before it goes for disinvestment" he explained.
RINL is looking forward to a net profit in 2002-03. The total outstanding loans of RINL is around Rs 1,600 crore as of date and Singh is confident of liquidating it by 2006.
LIC and UTI are the main lenders. RINL is endeavouring to pay principal loan of Rs 121 crore this year against Rs 56 crore paid in the previous year.
The accumulated losses of the plant would be around Rs 5,100 crore for March 2000-01 said Singh and the equity base of the company is Rs 7827 crore.
RINL was referred to BIFR in February 2000. Interest and depreciation in 2000-01 would be around Rs 810 crore said Singh.
The colossal debt burden of the company and the raw materials cost are the main stumbling blocks in the performance of the RINL. Raw material accounts for around 46 per cent of the total cost of RINL. Labour cost is around nine per cent.
Singh further said the company would have to move slowly towards the production of high-end steel products. RINL's presence is restricted to long products.
Singh, however said that production of flat products would require large-scale investments, which is not available with the company at present.
RINL hopes to increase it turnover to Rs 4,000 crore this year. The provisional figures for cash profit and operating profit for 2000-01 are Rs 150 crore and Rs 500 crore compared with a cash loss of Rs 130 crore and operating profit of Rs 252 crore in the previous year.
