Government To Infuse Rs 11,440 Crore In Rashtriya Ispat Nigam
The government has approved the revival for the alloy-maker that runs a 7.5 mtpa plant in Visakhapatnam, with a direct port connectivity.
The Ministry of Steel on Friday approved the infusion of Rs 11,440 crore in debt-laden Rashtriya Ispat Nigam Ltd. as equity or preferential capital.
The government has approved the revival for the alloy-maker that runs a 7.5 mtpa plant in Visakhapatnam, with a direct port connectivity.
The present equity infusion in RINL does not involve any private sector partnership or collaboration, the Ministry of Steel said in answer to a question in Rajya Sabha.
RINL has been grappling with financial distress for nearly a decade, facing consistent losses and a growing debt burden. RINL's challenges began when it expanded its capacity from 3 MTPA to 7.3 MTPA between 2014 and 2017, funded by high-interest loans. The major issue, however, is the lack of captive iron ore mines, forcing VSP to buy costly raw materials.
In 2021, the Union Cabinet approved a disinvestment plan for Vizag Steel Plant, but protests in the city halted the move.
In financial year 2024, the company reported a net loss of Rs 4,850 crore, up from Rs 2,850 crore in the previous year. By the end of financial year 2024, RINL’s total debt stood at Rs 17,000 crore.
For TDP leader Naidu, the revival is a key pre-poll promise. The steel plant holds emotional significance for the Telugu people, and its revival is crucial for the TDP, especially with MP Sribharat Mathukumilli's election victory.
As a 'Navratna' PSU, RINL employs over 13,000 people and has a manufacturing capacity of 10.8 million tonnes. While the Union government had previously considered privatising the company, the process was halted due to political opposition. To address RINL’s financial and operational challenges, the government infused Rs 1,650 crore into the company last year.
Currently operating at 63% capacity with two blast furnaces in operation, RINL plans to maintain this production level until June. The company aims to increase capacity utilisation to 72% in the July-September period, when the third blast furnace is expected to become operational. By the October-December period, RINL targets a ramp-up to approximately 92.5% capacity.
