Neelachal Ispat Nigam Ltd (NINL), a company co-promoted by MMTC Ltd and two Odisha government controlled entities, is eyeing Ebitda (earnings before interest, taxes, depreciation and amortisation) of Rs 400 crore in the current financial year (FY20).
NINL is eyeing a marginal net profit in FY20. S S Mohanty, NNL’s vice chairman and managing director, said the company expects to be back in the black powered by the launch of 20 new value-added products.
For the past five years, NINL has been haemorrhaging, largely due to a lack of capital infusion by promoters. Moreover, being a leveraged company, a sizeable chunk of its earnings goes into servicing loans. In the last financial year (FY19), NINL's Ebitda had turned positive during the first half, helped by the successful completion of blast furnace repair work and resumption of steel billets production. Net profit, though, has eluded NINL.
NINL had resumed steel billets production at its Steel Melting Shop (SMS) at Kalingangar, Odisha and, lately, has launched TMT bars to shore up margins. The steel PSU wishes to carry forward the momentum with a bouquet of finished products, different from the intermediates it had been offering earlier.
“New products in the offing include structurals, rounds, flats, beams, angle channels and round-cornered squares. We are also hopeful of starting work on our captive iron ore mine in this fiscal”, said Mohanty.
NINL’s road to profitability is still beset with hurdles. Promoters not sinking in their share of capital have piled up agonies for the PSU. In FY19, MMTC dipped into its own books for Rs 160 - Rs 79.8 crore and received Rs 80 crore from the Odisha government via its state PSUs- Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol).
In FY20 NINL expects Rs 140 crore of additional equity infusion. MMTC owns the largest equity in NINL at 49.9 per cent, OMC & Ipicol own 26 per cent which between them, other central public sector enterprises (CPSEs)- NMDC, BHEL Ltd and Mecon are minority shareholders.
NINL is among the 200 state-level public enterprises accumulating losses. Their cases are being considered for divestment by the Union government.
NINL operates a 1.1 million tonne steel plant at Odisha’s Kalinganagar Industrial Complex. In FY19 the unit produced 0.8 million tonnes of hot metal. It closed FY19 with a sales turnover of Rs 2,100 crore, soaring 126 per cent over FY18 sales.