Rashtriya Ispat Nigam Ltd could have generated enough cash to take up next phase of expansion provided it had captive source for raw materials, outgoing Chairman A P Choudhary said on his last day in office today.
"It is extremely difficult to generate adequate cash in a competitive world without having captive raw material sources. Our plan for additional four million tonnes capacity expansion is still pending for want of cash," Choudhary told PTI.
State-owned RINL has recently been allocated one iron ore mine in Rajasthan and three in Andhra Pradesh though none of them are operative yet. It depends on NMDC for iron ore and on imports for coking coal. These are the two main inputs for making steel.
RINL, which is on the verge of completing its current phase of expansion to reach 6.3 million tonnes per annum (mtpa) from 3.6 mtpa now, is operating its lone Vizag steel plant without any captive mine since inception in 1990.
As a result, it had to suffer losses whenever input prices went northward. This presents a difficult proposition as domestic steel rates are increasingly being linked to international prices.
Choudhary, who took over as the head of RINL in August 2011, had to run the show without the captive source of inputs during his entire tenure. He is retiring upon attaining the age of superannuation.
"We are already ready with the detailed project report for the next phase of expansion, but it could not be approved, mainly because of cash," Choudhary said.
RINL has plans to have a total capacity of 20 mtpa at an investment of over Rs 60,000 crore by 2027 for contributing in a "significant way" to the country's 300 mtpa steel-making capacity target by 2025.
