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Vizag Steel takes Rs 250 cr hit due to Hudhud cyclone, expects to restart by Oct-end

Each day, with or without operations, the plant incurs a fixed cost of around Rs 10 crore and so each day operations are hit, it costs money.

E. Kumar Sharma | October 24, 2014 | Updated 11:06 IST
Cyclone Hudhud
Cyclone Hudhud

At Vizag Steel, there is an unwritten norm to plant a tree for every tonne of steel produced. The company (the corporate entity is called Rashtriya Ispat Nigam Ltd) has so far planted 50 lakh trees in the plant and around its township, and in a year was to move to the goal of 63 lakh trees to match its annual production capacity of 6.3 million tonnes of steel.

But this will have to wait, for it lost 20 lakh trees in the Hudhud cyclone that wrecked the eastern port city of Visakhapatnam on October 12. This is not all. The plant's operations came to a standstill as power supply was disrupted. Each day, with or without operations, the plant incurs a fixed cost of around Rs 10 crore and so each day operations are hit, it costs money. "In the last one week we have slowly been trying to recover and restore operations... we have revived the coke oven batteries (which produce the raw material for blast furnaces) and have also started operations in two of our three blast furnaces," says P. Madhusudan, Chairman and Managing Director of RINL.

"We hope to be able to get back to our normal operations by the end of this month." However, that would mean about 20 days of operations being hit either completely or partially. This is in addition to the cost of repairs for some roof sheets and glass panels, etc. "We may end up with a loss of around Rs 250 crore. This is a ballpark estimate and we are trying to find out the extent to which this will get covered by the insurance policy that we have," says Madhusudan.

"When you have to revive a steel plant that has been shut down, it is almost like re-commissioning it... so we are being very careful and clear at each stage giving utmost priority to safety."

The plant has its own captive power generation, with a capacity to generate around 250 MW, which had also tripped following the cyclone but has now been revived. The plant is getting 50 MW from the state power distribution company also to run its operations. Madhusudan is hopeful that in another 10 days or so normal operations should be restored.

Vizag Steel recently completed its capacity expansion from 3 million tonnes to 6.3 million tonnes per annum at an estimated cost of Rs 12,300 crore. RINL posted a net profit of Rs 366 crore on Rs 13,431 crore revenue from operations in 2013/14. While the steel plant would resume operations shortly, the more difficult task would be to grow those 20 lakh trees that it lost in the cyclone.

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