RINL, the entity overseeing Visakhapatnam Steel Plant, faces decreased liquid steel production due to financial constraints. The Union Minister cites a drop in capacity utilization, hovering at 68% in 2022-23 from previous years' 87%. Efforts to secure alternative raw material sources and reduce costs have been initiated amidst delays in salary payments, indicative of ongoing liquidity issues.
Amidst financial constraints, RINL, the corporate body overseeing Visakhapatnam Steel Plant, faces a concerning decline in liquid steel production, as highlighted by Union Minister Faggan Singh Kulaste in a recent Rajya Sabha reply to BJP MP GVL Narasimha Rao's query.
Citing a substantial decrease in capacity utilization from 87% in 2021-22 to 68% in 2022-23, the Minister attributed this decline to liquidity constraints affecting RINL's operational capabilities. Efforts to bolster production involve sourcing iron ore and coal from alternative channels, aiming to ensure a steady supply of raw materials.
In a bid to mitigate rising raw material costs, the Ministry of Steel has advocated for the provision of domestic coking coal and thermal coal to RINL. Furthermore, efforts have been made to secure iron ore blocks through government assistance.
Acknowledging RINL's ongoing initiatives to improve its financial performance, the Minister addressed concerns about delayed salary payments. While salaries are typically disbursed on the first day of the following month, liquidity constraints led to delays in September and October 2023, indicating financial stress within the organization.
Highlighting RINL's financial performance over the last five years, the Minister mentioned a profit after tax of ₹96.70 crores in 2018-19 and ₹913.20 crores in 2021-22. These figures underscore the financial fluctuations experienced by the entity amidst varying market conditions and internal challenges.
RINL's challenges in liquid steel production underscore a complex interplay of financial constraints, capacity utilization, and raw material procurement. The drop in capacity utilization, a concerning trend from previous years, reflects the strain on operations due to liquidity issues. Efforts to secure alternative raw material sources and reduce costs through governmental interventions depict proactive measures amid these challenges. However, delayed salary payments signal ongoing financial stress within RINL, affecting its workforce. The fluctuating profitability over the last five years underlines the volatility of the steel industry amidst market conditions and internal hurdles. Addressing these financial constraints remains imperative for RINL to stabilize its operations and sustainably enhance its steel production capabilities.