RINL Gets Rs 11,440-Cr Boost

The plan, official sources told Bizz Buzz, includes an equity infusion of 90%, working capital augmenting and issuing of preferential shares redeemable after 10 years

RINL is very dear to Telugu people. The Visakhapatnam Steel Plant has a special place in the hearts and minds of the people of Andhra Pradesh. The Cabinet decided to provide equity support of over Rs10,000 crore for the plant. This has been done understanding the importance of the steel sector in building an Aatmanirbhar Bharat -- Narendra Modi, Prime Minister

Visakhapatnam: After several twists and turns, the NDA Government at the Centre has cleared a package at cost of Rs11,440 crore for revival of debt-ridden Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP).

This is the largest package offered to any public sector entity in the recent past with an aim to put it on the right track. The plan is to clear the debt burden, improve working capital status and operate all three blast furnaces to achieve 100 per cent capacity utilisation of the 7.3 million tonne integrated steel plant in Visakhapatnam, India’s first shore-based steel plant. It is expected to make a turnaround in 24 to 36 months.

The infusion includes Rs10,300 crore as equity capital into RINL and conversion of Rs1,140 crore working capital loan as 7 per cent non-cumulative preference share capital redeemable after 10 years to keep RINL as a going concern, the official statement said. The revival plan envisages that RINI will start full production with two blast furnaces in January 2025 and with three blast furnaces by August 2025.

“This is a very big revival package for the steel plant which plays a big role in the skill sector. The decision was taken with the patronage of Prime Minister Narendra Modi with the target to bring significant improvement in the performance of RINL. Besides NMDC, raw material security will be achieved through RINL’s subsidiaries,” a reliable source said.

RINL has strategic control over Orissa Minerals Development Company (OMDC) after it picked up a majority stake in Eastern Investment Limited (EIL). OMDC owns iron ore mines in neighbouring Odisha.

The package, which was being considered for the past several months after the maiden visit of Union Steel Minister HD Kumaraswamy and Union Minister of State for Steel Bhupatiraju Srinivas Varma to the steel plant after being sworn in as members in the Modi 3.0 Government. The decision cleared by the Cabinet Committee on Economic Affairs on Thursday nullifies the resolution for 100 per cent privatisation of RINL, its subsidiaries and joint ventures in January 2021.

The plan, official sources told Bizz Buzz, includes an equity infusion of 90 per cent, working capital augmenting and issuing of preferential shares redeemable after 10 years. As on March 31, 2024, RINL has a negative net worth of Rs4,538 crore with current assets valued at Rs7,687 crore and the liabilities mounting to over Rs25,000 crore. Downgrading its credit rating also disqualifies it from taking fresh loans due to failure to pay interest and loans as well as dues to the vendors on time.

While thanking Prime Minister Narendra Modi, TDP State president Palla Srinivasa Rao in a posting on X, recalled how Chief Minister N Chandrababu Naidu took up the issue with the Central leadership to prevent the privatisation of RINL.

Visakhapatnam MP M Sribharat conveyed his gratitude for the efforts of Kumaraswamy and Finance Minister Nirmala Sitharaman, said on X: “The Vizag Steel Plant is not just a facility; it is the pride of our region and a symbol of resilience for the people of Uttarandhra. For decades, it has been a cornerstone of our industrial development and an emotion deeply rooted in the hearts of every Andhrite/Vizagite.”

He said “I sincerely thank our visionary Chief Minister Shri Chandra Babu Naidu garu for his unwavering commitment and tireless efforts in ensuring this significant allocation. This is a testament to his dedication to safeguarding the future of this historic institution. I’m grateful that through him one of my 7 election promises has a real path to fulfillment. I urge all workers, unions, and stakeholders to unite in this moment of opportunity. Let us work together with renewed determination to achieve stellar results and restore the plant to its former glory. This revival will not only rejuvenate the plant but also strengthen the economy of Visakhapatnam and empower thousands of families dependent on it. Together, let’s make the Vizag Steel Plant a shining beacon of prosperity and pride once again!.”