Increase in the rail freight charge by 6.5 per cent will entail a heavy burden on the Rashtriya Ispat Nigam Limited, the corporate entity of Visakhapatnam Steel Plant.
Already faced with raw material insecurity, spending a lion’s share of its cost towards iron ore, RINL will have to cough up at least Rs.100 crore per annum, sources have told The Hindu .
For transporting iron ore, dolomite, boiler coal, and other raw material from various mining sites and stockyards, RINL has to incur an additional expenditure of Rs.65 crore. On export of various products, it has to spend Rs.45 crore.
RINL’s profits are also shrinking due to sluggish market and high cost of raw material.
The Navratna company clocked a turnover of Rs.13,527 crore with exports accounting for an earning of Rs.750 crore during 2013-14. The company’s ambitious target for this year is put at Rs.20,000 crore. It aims at increasing it progressively to Rs.30,000 crore by 2016-17.
RINL is ramping up production under its expansion project, which has been completed with an investment of Rs.12,500 crore mobilised through internal accruals. The capacity has been increased from 3 million tonne to 6.3 million tonne.
Presently, the company is facing power shortage as well as water crisis.
While the APEPDCL has imposed over Rs.130 crore fine for alleged overdrawal, the Visakhapatnam Industrial Water Supply Company has almost doubled the tariff from December 2013.
Union leaders fear that the burden due to steep increase in freight cost would force the company to pass the burden to the customers.
“The cost may go up by Rs.1,000 per tonne,” said deputy general secretary of Steel Plant Employees’ Union J. Simhachalam.
Steel Consumer Council member Varasala Srinivasa Rao said that in view of the burden the revised freight cost would cast on the consumers, the government should roll it back.
