Investigation ordered into RINL’s Visakhapatnam factory explosion

Investigation ordered into RINL’s Visakhapatnam factory explosion

Hyderabad: The Andhra Pradesh government on Thursday ordered an inquiry into an explosion that claimed 11 lives and left eight people critically injured at a steel plant in Visakhapatnam run by state-owned Rashtriya Ispat Nigam Ltd (RINL), in which the Centre plans to divest a 10% stake through an initial share sale.

Chief minister N. Kiran Kumar Reddy directed the authorities to conduct a probe under the Factories Act and submit a report immediately. The joint chief inspector of factories will conduct the inquiry and the director of factories will take stock of the situation, PTI reported. A committee is also being formed to probe the explosion, which analysts said wasn’t likely to have an impact on the share sale.

The blast occurred in the oxygen control unit in the newly commissioned steel melting shop at the plant. According to officials, the dead included five employees of RINL, three workers of the Kolkata-based principal consultant M.N. Dastur and Co. (P) Ltd and two contract workers.

The official didn’t want to be named.

The injured are currently “undergoing treatment and their condition is critical", said the RINL official.

The incident took place during a trial run at the newly installed oxygen control unit on the day the unit was commissioned. Nearly 50 workers were on the spot when the blast took place, said the RINL official.

“The plant is open and the production is going on as usual," he said, without disclosing the financial loss to the company.

“The accident will cause some delays in the expansion scheduled to be completed in the year ending 31 March," A.P. Choudhary, chairman and managing director of RINL, told Bloomberg on Thursday.

RINL has expanded its capacity to 6.3 million tonnes per annum (mtpa) of liquid steel from 3 mtpa at an estimated cost of 12,291 crore. The new blast furnace was commissioned on 24 April.

RINL has also undertaken modernization and upgrade of its blast furnaces which will increase the hot metal production capacity by 1 mtpa, taking the total capacity to 7.3 mtpa. The units are likely to be commissioned progressively by 2014.

The state-run company earned revenue of 14,457 crore in the year ended 31 March. The government aims to raise 2,500 crore by divesting 10% of its 100% holding in RINL through an initial public offering (IPO).

“I don’t think the incident will have any significant impact on their upcoming IPO," said Giriraj Daga, an analyst tracking steel at the Mumbai-based brokerage house Nirmal Bang Equities Pvt. Ltd. “Investors go by the fundamentals of the company."

The occurrence of accidents at regular intervals at the company’s facilities could be a cause of concern, according to another analyst. In May, two contract workers died in an accident at a newly commissioned blast furnace.

“This could be one worry of investors that these things are happening so persistently," a mining and materials analyst at a Mumbai-based brokerage firm said, requesting anonymity. But he said the impact could depend on the extent of damage caused and the cost of repairs.

Unionized workers at the factory gathered before the entrance of the plant demanding 1 crore compensation to families of the dead and a safety review.

“During setting up of a plant, be it steel or cement, there is every chance of a mishap, as different people are involved at every stage and the complexities involved in moving, erection and handling the equipment," said A.C. Verma, joint-managing director of Spongytech Consulting Engineers Pvt. Ltd, a Raipur-based project management consultancy that specializes in setting up steel and cement plants.

“I don’t know what is the exact cause behind the accident, but accidents like these could be avoided by having robust safety measures in place," Verma said.

Yogendra Kalavalapalli in Hyderabad, Bloomberg and PTI contributed to this report.

viswanath.p@livemint.com

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