RINL under CBI scanner

By SNV Sudhir

Visakhapatnam, May 21, 2013:  Fingers are being pointed at the RINL’s unsecured credit sale to the tune of Rs 285 crs, and also has now come under CBI scanner. RINL had given stocks of its steel products on credit without security to more than 26 traders and firms which is not a regular practice in public sector steel makers like SAIL and many others.

Only Long Term Customers (LTCs) are given stocks on 45 days credit that too on bank guarantee or post dated cheques as security. This unsecured credit sales to some of those who are not on the list of LTCs have raised many eyebrows. The ACB wing of the CBI Vizag office here had received a complaint in this regard. The CBI sleuths would first verify the allegations and then proceed with the regular procedure, said a highly placed source inn the CBI office.

The stocks were sold on unsecured credit during February and March just before the end of 2012-13 financial year. Of the total amount, steel products worth Rs Rs 75.25 cr were sold in February and Rs 210.59 cr in March.

The normal practice is that stocks are given to very limited long time customers with credit facility of 45 days with a bank guarantee. “Only L & T was given stocks on credit without any security as they execute many works at Visakhapatnam Steel Plant with a guarantee that if they don’t pay the cost that can be adjusted in the bills RINL has to pay to them. We wonder why RINL executives given so many crores worth stocks on credit without any security. Who is responsible if they default on the payment. We suspect some malifide interest on the part of RINL top executives in extending such a ‘special’ facility to the traders. They were also given incentives in the form of discounts to the tune from Rs 4,000 to 7,000 on a tonne,” Steel Progressive Employees Union, which is affiliated to CITU, deputy general secretary, J Simhachalam told  this correspondent.

However RINL earlier said that in steel market, all producers have been revising their prices by giving incentives, discount, credit etc to attract customers to capture the limited demand, increase their sales and destocking inventory.  In a couple of months, since June, 2012 onwards when RINL had also no option than to go for such incentive tools to match competitive  prices to maintain the price increase.

Accordingly, Marketing Department has taken initiatives and have been able to achieve sales turnover of Rs 13,650 Crs. The credit given during 2012-13 are promptly realized within a month and in case it exceeds time limit, penal interest are charged. All the credit sanctions have been made as per extant system and after verification at regional and branch level, said RINL authorities.

“Yes, we have received a complaint on unsecured credit sales by RINL and we would first verify it,” a top official in CBI here told this correspondent.