RINL May Turn Profitable (after 3-YR gap) in FY19: CMD

Rashtriya Ispat Nigam Ltd (RINL), also known as Vizag Steel, is expecting to be back in the black in fiscal 2018-19 after a gap of 3 years. In the last fiscal, RINL, the second largest steel-making company in the public sector, posted an EBITDA of ₹ 200 crore. In an interaction with the media, CMD of RINL, P Madhusudan, said the outlook for the steel industry is positive, as all the consuming sectors are looking up. RINL is now reaping the benefits of expansion and modernisation, which has stabilised by now, coupled with steady markets, mostly in the southern region. Excerpts:

How was the last fiscal for RINL? What kind of growth do you expect in 2018-19?

We had a good year in 2017-18. The industry expansion and modernisation is happening. External factors, which influenced the market in 2015-16, resulted in stress. This resulted in an operating loss of ₹660 crore for RINL. We made a recovery in 2016-17 and brought down the operating loss to ₹250 crore. The situation has improved further in the last fiscal and I am happy to announce an operating profit of ₹200 crore in 2017-18. RINL is now reaping the benefits of expansion and modernisation, which has stabilised by now coupled, with steady markets, mostly in the southern region.

Our 6.3 million tons per annum (mtpa) expansion has been commissioned. The rated capacity in BF3 is improving and slowly moving towards 100 percent capacity utilisation level. Modernisation of BF2 has been done and all furnaces are working. We have produced 500,000 tons in March 2018. In this run rate, we would be producing 6.5 mtpa crude steel in 2018-19 and saleable steel of around 5.7 mtpa.

How do you see the steel market behaving? What would be the impact on margins?

The markets are also fairly stable now. Coal prices, which had increased, have come down. Markets have absorbed the price and volumes are also available. This has resulted in a positive EBIDTA of ₹200 crore on a sales turnover of ₹16,500 crore, a growth of 31 percent year-on-year.

In Q4, we made a cash profit after two-and-a-half years. This has been possible because of the internal initiatives taken in 2017-18. We have increased the usage of PCI in BF1 and BF3, leveraging on higher PCI rate. This has led to reduced usage of expensive coal.