Neelachal Ispat on turnaround trail, makes operating profit in April-August

MMTC-controlled Neelachal Ispat Nigam Ltd (NINL) has shown signs of recovery in this fiscal by delivering a positive Ebitda (earnings before interest, taxes, depreciation & amortisation) or operating income. 

At the company's 36th annual general meeting in Bhubaneswar, S S Mohanty, the company's vice chairman & managing director said, NINL generated an Ebitda of Rs 4,000 per tonne of pig iron during the April-August period. In the comparable period of last fiscal, the company's performance was Ebitda-negative. 

NINL's positive Ebitda in FY19 is attributed to its marked increase in production after the blast furnace resumed operations in May 2018, following a capital repair. Following the overhaul, the blast furnace's production capacity has doubled. At present, the furnace is churning out an average production of 3,000 tonnes of hot metal per day. 

The steel company recorded its best-ever Q2 (July-September) production this fiscal. With a production of 0.22 million tonnes of hot metal and 0.19 million tonnes of pig iron, NINL's output soared 81 per cent in the quarter. Its September production figures also marked the best ever since inception -- the plant produced 75,535 tonnes of hot metal and 63,550 tonnes of pig iron.

“The NINL collective is working towards a cost reduction plan and has contributed towards increasing the Ebitda margin, which has been positive the past six months”, Mohanty said.

NINL's steel plant is located at Kalinganagar, home to a cluster of steel units owned by Tata Steel, Jindal Stainless Ltd (JSL), Mid East Integrated Steel (Mesco Steel) and others. The public sector steel maker hopes its steel melting shop (SMS) will be fully operational by the end of October this year. This will lead to production of billets to enhance productivity and profitability. Besides, NINL aims to roll out TMT bars and wire rods by November this year. The value-added products carrying the NINL tag will be manufactured through a conversion process.  

After turning Ebitda positive, NINL has gained a toehold in the path of turnaround and expects to turn in a net profit after commencing operations from its captive iron ore mines at Koira. The steel PSU has already initiated the process to select Mine Developer cum Operator (MDO) for the captive mines. Mining operations are set to begin by the end of this fiscal. 

MMTC has the biggest equity in NINL with a holding of 49.9 per cent. Two Odisha government-owned entities -- Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) -- own a combined stake of 26 per cent. Central public sector enterprises NMDC Ltd, BHEL Ltd and Mecon have minority equity participation in NINL.