Cabinet approves Rs11,440-cr revival plan for Rashtriya Ispat Nigam Ltd
19 Jan 2025
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The union cabinet has approved a Rs11,440-crore revival plan for Rashtriya Ispat Nigam Ltd (RINL), which operates the Visakhapatnam Steel Plant (VSP) in Andhra Pradesh, the only offshore steel plant in the government sector.
Under the revival plan approved by the Cabinet Committee on Economic Affairs (CCEA), on Friday, the government will infuse Rs10,300 crore as equity capital into the cash-strapped steel maker. In addition, an amount of Rs1140 crore, given as working capital loan to RINL, will be converted to 7 per cent non-cumulative preferential share capital redeemable after 10 years.
RINL, a central public sector enterprise under the administrative control of the ministry of steel, has an installed capacity of 7.3 million tonnes per annum, and is a going concern despite its operational and financial constraints.
With a negative net worth of Rs4,538 crore as of 31 March 2024, the financial condition of RINL is critical. RINL has total assets valued at Rs7,686.24 crore against liabilities to the tune of Rs26,114.92 crore.
RINL has exhausted its borrowing limits from banks for working capital and is not in a position to get further loans. RINL also defaulted on servicing its capex loan in June 2024.
The Rs10,300-crore equity infusion will help RINL overcome the operational constraints and restart the blast furnace and gradually reach full production capacity, which is in the national interest. It will also help employees and others dependent on the working of RINL to earn their livelihood.
As per the revival plan, RINL will operationalise two blast furnaces this month and a third one in August.
The revival and full capacity utilisation of RINL will ensure efficient utilisation of national resources and is in line with the objective of National Steel Policy, 2017 of achieving self-sufficiency in steel, says a steel ministry release.
