Rashtriya Ispat Nigam Ltd (RINL) will make its 3.3-million-tonne-per-annum (mtpa) capacity expansion project fully operational by December. Steel Ministry sources told Business Line the State-owned steelmaker has decided not to borrow more this fiscal, as an increased cash flow will take care of the capital expenditure.
As part of the phase one of the expansion plan, the company will open a new steel melting shop, a sinter plant, and wire rod, structural and special bar mills at its Vizag facility at an estimated investment of Rs 6,165 crore.
A new blast furnace has already been commissioned and is working at around 60 per cent capacity. On synchronisation with the new units, the blast furnace will be fully utilised. The company will stick to its Rs 1,600-crore capital expenditure plan for FY14. It has so far spent around Rs 900 crore.
The estimated cost of the new melting shop is Rs 2,344 crore and the sinter plant, Rs 754 crore. The combined cost of the wire rod, structural and bar mills is placed at around Rs 3,067 crore.
Though the first stage of expansion is set to be completed, residual expenditure is likely. For seamless start of work in stage-II, RINL will need to make capital expenditure this fiscal.
The last leg of the project got delayed by over a year largely because of an accident at the oxygen pressure reduction station, critical to the new melting shop commissioning. The stage I will take RINL’s capcity to 6.3 mtpa.
“The delay may cost the project more. There are legal claims from the contractors and the exact cost cannot be ascertained now,” said a top official, requesting anonymity.
Earlier, the RINL management had considered fresh borrowing or issue of non-convertible debenture. However, higher interest rates and increased cash flow encouraged it to drop the plan. jayanta.mallick@thehindu.co.in