With markets being subdued and uncertain, thanks to the pandemic impact, Rashtriya Ispat Nigam Limited (RINL), the holding company for the Visakhapatnam Steel Plant (VSP), is seen to be moving cautiously on its topline target and is looking at a realistic figure of INR 16,000-17,000 crore for financial year 2020-21 (FY21).
P.K. Rath, Chairman-cum-Managing Director, RINL, told SteelMint that the steel PSU had recorded revenue earnings of INR 20,000 crore in 2018-19 (FY19) and had set an ambitious target of INR 27,000 crore for FY20. However, due to the sluggishness in the market almost throughout FY20, RINL was able to achieve a turnover of INR 16,000 crore in that very fiscal against the targeted INR 27,000 crore.
“When a revenue target is not achieved in a particular year, it naturally becomes the target of the following year. However, revenue targets should be realistic. As we are expecting demand to revive from the second quarter onwards, I believe a realistic target for FY21 is somewhere in the range of INR 16,000-18,000 crore,” Rath told SteelMint.
He also reminded that, in FY20, despite facing a lot of difficulties, RINL was still able to achieve a topline of INR 16,000 crore.
Investments in FY21 scaled down
RINL has scaled down its investment target for FY21 by 50% against the COVID-19 backdrop. The PSU has set an investment target of INR 700 crore for this fiscal against last fiscal’s capex of around INR 1,400 crore. Rath said the capex for FY21 has come down “due to the uncertainty about revival in market sentiments after COVID-19”.
Elaborating on where the INR 700 crore will be invested, Rath said: “We have already accomplished expansion to 7.3 mn t overall but some of the smaller units await upgradation to match overall capacity. A part of the capex is also going into the new forged wheel factory at Rae Bareli.”
Debt scenario
Any steel industry will have working capital loans and RINL is no exception. Speaking about the debts on RINL’s books, Rath said, “RINL’s working capital loans amount to INR 12,000 crore, while capex loans stand at INR 9,000 crore.”
He further informed that, till date, servicing loans has not been a major problem and that RINL has never deferred its payments to government banks and MSMEs. “With the market showing signs of recovery, I believe servicing of loans will become much easier for us,” Rath concluded.
~By Madhumita Mookerji
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