Slump spurs demand for merger of RINL, NMDC

Recognised union of RINL says the merger is mutually beneficial

RINL, a Navratna company, incurred a net loss of Rs. 1,421 crore during 2015-16.— File Photo: K.R. Deepak

The continuation of grim scenario in the steel industry has brought into focus the demand for merger of the Rashtriya Ispat Nigam Limited (RINL) and National Mineral Development Corporation (NMDC).

Visakha Steel Employees’ Congress, the recognised union of RINL, corporate entity of the Visakhapatnam Steel Plant, feels that now in the larger interest of the country, the Centre should respond to the long-pending demand for the merger.

VSEC general secretary Mantri Rajasekhar told

The Hindu on Monday that the decision would be mutually beneficial. “We have a land bank of 25,000 acres with a large talent pool and experience in steel making. On the other hand, NMDC, which owns several mining blocks and supplies iron ore to RINL, is in the process of privatising its three million tonne integrated steel plant at Nagarnar in Bastar district of Chattisgarh.

“Almost 40 per cent of our production cost is going towards iron ore. It is costing Rs.4,000 to Rs.5,000 per tonne as we don’t have captive mines whereas JSW, TISCO, Essar and some individual owners are spending just Rs.1500 to Rs.2,000 per tonne,” Mr. Rajasekhar said. RINL, a Navratna company, incurred a net loss of Rs.1,421 crore during 2015-16. With a slump projected in the second half of current fiscal, the company will not make any dramatic recovery in the near future.

Joint campaign

RINL’s representation for allotment of captive iron ore mines in Kukunoor in West Godavari is still under consideration. The exploration of blocks allotted in Bhilwara in Rajasthan and sourcing of raw material after payment of Rs.369 crore for strategic control over Bird Groups of Company have still remained a far cry. The merger proposal, which was mooted by the management itself a decade ago, was put in the cold storage due to lukewarm response from the Centre. Now all the unions of the RINL have decided to launch a joint campaign to press for the merger immediately.

The RINL, after completing 6.3 million tonne expansion project, is ramping up the new units. It is also investing Rs.5,000 crore for capital repairs of blast furnaces and augmenting the production of other units to raise the capacity further to 7.3 million tonne.

Recession has already hit all the major steel producers, including SAIL. The decision to continue Minimum Import Price to discourage the dumping of cheap steel from China has not brought any cheer to the steel industry as the demand for steel consumption has not appreciated. “Increase in per capita consumption can be achieved only when manufacturing and construction sectors will pick up. Otherwise, inventory will remain an area of major concern forcing steel producers to operate their units by scaling down their rated capacity,” a top official of a private steel making unit, said.