Cabinet Approves Rs 11,440 Crore Revival Package for Debt-Stricken RINL.

The Union Cabinet recently approved a Rs. 11,440 crore revival package for Rashtriya Ispat Nigam Limited (RINL), also known as Vizag Steel, to help the debt-laden public-sector undertaking (PSU) overcome its financial challenges. The package aims to resolve several legacy issues faced by the company, according to Union Minister of Information and Broadcasting Ashwini Vaishnaw.

The approved package includes Rs 10,300 crore in equity capital and the conversion of Rs 11,440 crore in working capital loans into 7% non-cumulative preference share capital, redeemable after 10 years. This restructuring is intended to ensure RINL remains operational and viable.

RINL operates the Visakhapatnam Steel Plant (VSP), which is the only offshore steel plant in the government sector in Andhra Pradesh, with a capacity of 7.3 million tonnes per annum of liquid steel. However, the financial health of the company has been critical, with a negative net worth of Rs 4,538 crore at the end of FY24. Additionally, its current liabilities far exceed its assets, putting further strain on its operations.

Due to financial difficulties, RINL had exhausted its borrowing limits and was unable to secure further loans. It also defaulted on capex loan repayments and interest payments earlier this year. As part of the revival plan, RINL is expected to begin full production in January 2025 with two blast furnaces and expand to three blast furnaces by August 2025.

In a bid to address its financial woes, RINL sold its forged wheel plant in Raebareli to Indian Railways for Rs 2,250 crore last year, using the proceeds to settle bank loans. Despite the challenges, the Cabinet emphasized that the revival of VSP to full capacity will play a crucial role in stabilizing the Indian steel market, boosting production, and preserving jobs at the plant.

The Cabinet also outlined efforts to secure raw materials for RINL and modernize the plant, which will further contribute to the company’s operational efficiency and alignment with the National Steel Policy, 2017.

BS