RINL agreement comes under scanner

By SNV Sudhir

Visakhapatnam, July 8, 2013: The RINL seems to be bogged in repeated controversies. In a recent development, RINL’s decision to supply raw material to an Uttar Pradesh based entrepreneur run rolling mills and then buy finished products from it, has come under scanner and invited bitter criticism from all quarters.

It was learnt that coming under political pressure the decision was taken by the RINL in the last week of June despite objections raised by some non functional directors. Interestingly the agreement was signed with the UP based entrepreneur from where the union steel minister Beni Prasad Verma, hails from.

According to the agreement the RINL would supply billets to the yet to be set up steel rolling mill in Gondia near Lucknow and buy the finished product-rods from it, for which the management said to have agreed to pay Rs 3,700 per tonne for the finished product.   According to the highly placed sources in the RINL the same billets were given to a local private rolling mill and agreed to buy back the finished product at Rs 3,100 per tonne.

The RINL already has 3 rolling mills under its armour to covert the billets into the finished products. “Even if RINL wanted to supply excess billets to the UP based mill, management could have done it with local rolling mills. There are more than 20 such private rolling mills in the coastal region spread from Vizianagaram to Nellore. What is the necessity to go all the way to supply it to far way UP based rolling mill and buy back at a higher price,” said CITU deputy general secretary, J Simhachalam.

Interestingly the said rolling mill is yet to be constructed with an investment of Rs 400 crs, for which Bhoomi Puja was held in the first week of July.  Earlier too a decision by the RINL to invest Rs 1,000 cr in UPA chairperson and Congress president, Sonia Gandhi’s home constituency Rae Bareli in Uttar Pradesh also faced bitter criticism.

RINL signed MoUs with the Indian Railways to establish a forged wheel plant at Rae Bareli with an investment of Rs 1,000 cr and an axle plant at New Jalpaiguri in West Bengal at a cost of Rs 278 cr.  Trade unions opposed the decision stating that yielding to the political pressure RINL signed the MoUs ignoring the local interests.

Unions questioned the need to invest Rs 1,000 cr in far away Uttar Pradesh, when there was an urgent need to pool up resources for internal modifications of the existing plant which costs around Rs 3,000 to 4,000 cr.