The CAG on Thursday pulled up state-owned steel maker Rashtriya Ispat Nigam (RINL) for overshooting targeted date of completion of its ongoing capacity expansion and foregoing an opportunity to earn R1,561-crore gross margin in three fiscals ended 2013-14.
The steelmaker took up the capacity addition from 3 mtpa to 6.3 mtpa at a total cost of R8,692 crore in October 2005, envisaging to complete the first phase exactly in three years and the final phase in 2009. Its board approved the revised estimate to R12,291 crore in 2011 and completion of the capacity expansion dates to 2011 and 2012, respectively.
“However, RINL has not achieved (till August 2014) the dates of completion of capacity expansion and kept revising the same… Despite prolonged time and cost overrun, the capacity expansion has not yet materialised,” the CAG said in a report tabled in Parliament.
Major reasons for the time overrun were the delay in engagement of consultant, absence of appropriate sub-activity wise timeframes for finalising the contracts, delay in formulation of tender conditions and constitution of board-level sub-committees with adequate financial powers, among others.
“Delay in commissioning of various production units of capacity expansion has resulted in a loss of production of 55.63 lakh tonnes of saleable steel in the period from the scheduled date of commissioning as approved by BOD of RINL to the end of March 2014,” CAG said.
“At the gross margin earned by RINL in the above periods on the respective products, RINL has foregone the opportunity to earn a gross margin of R1,560.54 crore,” it added.
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