Visakhapatnam: Rashtriya Ispat Nigam Limited (RINL), the flagship company of Visakhapatnam Steel Plant, is facing a severe financial crisis, so much so that it is finding it difficult to even pay salaries to its employees.
Due to poor sales and no surplus funds, the RINL management is facing a currency-flow crunch. The global recession in the steel industry is not helping either.
Poor sales have led to the stock piling up to 7.5 lakh tonnes, forcing the RINL to cut production. For the first time since its inception, RINL paid July salaries to the executives on August 9.
The unions have demanded that the RINL management strengthen the marketing department and introduce new strategies on par with the private steel companies, to boost sales.
RINL pays about Rs 200 crore for salaries each month to its employees. During 2018-19, the plant achieved a sales turnover of Rs 20,844 crore and registered a net profit of Rs 75 crore. The steel ministry fixed a target of crore 25,000 cr. turnover in the present fiscal.
“It is a fact that the plant is facing very tough times. Production has reduced as the stocks in the yards have piled up. The management has no money. The stocks in the yards have reached 7.5 lakh tonnes, as of today. As there is no sale of steel, automatically currency flow has been affected. New marketing techniques should be launched and marketing department should wake up and improve the sales. Everyone is talking about the recession, but no one is trying to increase the sales,” said a top RINL official.
Meanwhile, there is no control over steel imports. Consumers are importing steel from China and Ukraine. “In fact, all the steel factories in the country are facing a similar situation, but the RINL situation is pathetic. Due to the lack of the captive iron ore mines, the plant is spending huge amounts to procure raw material. The management is spending Rs 4,500 per one tonne of raw material where the other plants that have their own mines are spending Rs 1,800 per tonne,” the official said.
Responding to the company’s financial crisis, RINL deputy general manager, corporate communications, R.P. Sharma said that almost all steel units in the country were facing a similar situation. “Due to poor sales, there was a little delay in paying salaries,” said Mr Sharma....