Date | Aug 10, 2015:
He is a triple qualified professional — a chartered accountant, cost accountant and company secretary. He started his career as a junior manager in finance at the Bhilai Steel Plant and after serving in various capacities moved to IISCO Steel Plant as general manager. He joined Rashtriya Ispat Nigam Limited (RINL) about six years ago as director (finance), was instrumental in bringing about a number of structural changes in the finance functions and made significant contributions through prudent fiscal management only to move into the top slot as RINL's chairman-cum-managing director on January 1, 2014. As a part of RINL's business diversification strategy, he played a key role in initiating the largest forged wheel plant at Rae Bareli, the second largest rail axle plant at New Jalpaiguri in West Bengal, manufacture of transmission line towers at Visakhapatnam through a joint venture with Power Grid Corporation, and laying of an iron ore slurry pipeline from Nagarnar to Visakhapatnam through a JV with NMDC. In a chat with Manish of TOI, RINL's ninth CMD, P Madhusudan, speaks about the future plans of the steel major.
What is the status of securing captive mines for the Visakhapatnam Steel Plant?
There are two positive developments with respect to securing captive mines in Rajasthan. The letter of award has already been given and we are in the process of carrying out a detailed exploration in Bhilwara district. We have engaged a consultant for the mining plan and the process of getting certain permissions for mining in grazing lands from village panchayats has almost been completed. Once the mining plan is submitted and cleared, we will finalise the lease agreement. The Rajasthan government also recommended a mine in Jajhpur. But before the Centre approved the second mine, the MMDR Act (Mines and Minerals Development and Regulation Act) got introduced, so pending applications had to be processed again. Bhilwara and Jajhpur have a good amount of iron ore reserves. So one mine is already allotted to us and the other mine has been recommended by the state government for us and is under the consideration of the central government.
What about the captive mines in Andhra Pradesh?
The AP government has already recommended an iron ore reserve in West Godavari to be jointly developed by APMDC and RINL. The proposal has been approved by the AP government and sent to the Union ministry of mines. As of now people are talking about 20-25 million tonnes of reserve and as the mine is extending towards Chhattisgarh, it may have larger reserves than the current estimates as Chhattisgarh is rich in mines. We are awaiting approval from the ministry of mines for this proposal.
What new investments is RINL planning?
We are already working on the forged wheel plant at Rae Baraeli in UP. We have taken possession of the land and developmental activities are being taken up at the site. It will take around three years for the plant to come up. It's a very safe model as railways will be paying us on a cost plus basis and 80% assured offtake. Also, we have a joint venture with Power Grid Corporation for building transmission towers. Initially, it will be a 1.2 lakh tonnes capacity plant in Vizag and will be on a 50:50 joint venture basis. With grid corridors being developed across the country, this JV will bring in good synergy.
What is the status of the axle plant planned at Jalpaiguri?
The project was moving a little slow as we were contemplating whether it could be set up in Vizag and we also took it up with the railways, but after discussions decided to set it up in Jalapaiguri itself. So now that clarity has come, we'll sign the definitive agreements. We will finalise the packages and execute it on a fast-track basis.
RINL recently synchronised a 120MW captive power plant. Is RINL self-sufficient now?
Right now we are self-sufficient. The 6.3 mtpa expansion plan is already commissioned and we are in the process of stabilising the systems and parallelly upgrading old units. In two years time, we will go up to 7.3 mtpa and at that level there will be dependence on the state government. We have parallelly initiated a joint venture proposal with National Thermal Power Corporation. It is in the initial stage and we are looking at the possibility. The advantage is that NTPC has linkages to coal and being a power producing company, they also have the expertise. With these two advantages, we are looking at coming together for a developing a power plant.
The CAG has pointed out undue delays in RINL's expansion. Is the 6.3 mtpa expansion completed?
The streamlining of systems in a large integrated steel plant and stabilising production takes time. We have already commissioned the 6.3 mtpa expansion plan, but in totality we have to integrate the existing and new facilities. We have to bring them into 100% synchronisation to reach 100% capacity utilisation. We are in a unique transition phase where we are modernising some old systems like Blast Furnace-2. In two years time, we will stabilise and reach the rated capacity of 7.3 mtpa, including capacity enhancement on account of modernisation.
When will RINL float its IPO?
RINL was ready to go public last year itself, but due to adverse market conditions and Cyclone Hudhud, it was not taken forward. We have to wait and see how government wants to take it forward. It has to take a call on it.
What are the initiatives being taken to ramp up exports?
We have already opened a marketing office in Colombo and have set up a dedicated rolling mill there. We send our semis to Colombo as import duty is less there for semis as compared to finished products and there is better value addition. We are sending around 6000-7000 tonnes to Colombo and selling the finished products globally. The African economy is also growing in terms of steel demand and we exploring those markets. Earlier, we thought RINL and SAIL together will export products but we are yet to take that idea forward. If that doesn't fructify, RINL will do it on its own. Our quality is very well accepted in export markets.
What are the major challenges facing the Indian steel sector?
The industry has been asking the government to give support in the form of higher duties on imports. In the short term, the Indian steel sector needs support, but the long term view is we will be witnessing growth in housing, infrastructure and captive goods sector. There will definitely be improvement in demand for steel and then the threat of imports will also come down. We are in a globalised economy, so industry also needs to focus on higher efficiencies. We have adapt to new norms and efficiency parameters coming up in the global markets.
What are the losses due to Cyclone Hudhud?
The operations were revived completely by the first week of November and the production was higher in December than in September last year. That indicates that we recovered fully. On the expansion front, two mills — bar and structural mills — got impacted as their roof sheeting got damaged due to the cyclone. The agencies executing them also said that unless the roof sheeting is completed, the remaining work cannot be taken up. We have completed this work also and commissioned both the mills in April.
What is the loss of greenery due to the cyclone?
RINL had about 5 million trees in its township, nearly 20-25% of which got damaged due to the cyclone. But we are now taking up plantation on a large scale to retain greenery in our township.
Does RINL see itself playing a role in the development of the new capital at Amaravati and smart city Vizag?
Capital construction and smart city projects will be a big boon to RINL. We are closer to these areas and are already planning to establish an office in Vijayawada as well as another office in Vizag so that we can track the developments better and cater to the new demand that will be created in both these cities. Competition wise we will be in a much better position than any other player in the country. RINL also holds the advantage of producing all steel products needed for the construction sector.
(Source: http://timesofindia.indiatimes.com/)