Visakhapatnam Steel Plant
New Delhi: The Cabinet Committee on Economic Affairs (CCEA) has approved the revival plan for Rashtriya Ispat Nigam Limited (RINL) for a total of ₹11,440 crores. The infusion includes ₹10,300 crore as equity capital into RINL and conversion of ₹1140 crore working capital loan as 7% non-cumulative preference share capital redeemable after 10 years to keep RINL as a going concern. “This is one of the largest financial and revival packages taken up. RINL has a special place in the industry,” Union Information & Broadcasting Minister, Ashwini Vaishnaw, said.
The initiative for the revival package of RINL was spearheaded by National Democratic Alliance members Telugu Desam Party (TDP) and Janata Dal (Secular) who applied pressure on the government and stalled the RINL divestment. Janata Dal (Secular) leader HD Kumaraswamy is the Minister of Heavy Industries and Steel in the present NDA government at the Centre. TDP leader and Andhra Pradesh Chief Minister Nara Chandrababu Naidu alongside Kumaraswamy played a decisive role in the RNIL revival.
The revival plan envisages that RINL will start full production with two blast furnaces in January 2025 and with three blast furnaces in August 2025.
RINL is a Schedule–A Central Public Sector Enterprise (CPSE) under the administrative control of the Ministry of Steel with 100% ownership of the Government of India. It operates the Visakhapatnam Steel Plant (VSP), the only offshore steel plant under the Government sector in Andhra Pradesh. It has an installed capacity of 7.3 million tonnes per annum (MTPA) of liquid steel. The revival and continued operation of VSP at its full capacity is expected to ensure efficient utilization of public resources and help in achieving the objectives of National Steel Policy, 2017.
The financial condition of RINL is critical and as of March 31, 2024, its net worth was ₹(-)4538.00 crore, current assets were ₹7,686.24 and current liabilities were ₹26,114.92 crores. It has exhausted the sanctioned borrowing limits from banks for working capital and was not in a position to get further loans from Banks. It also defaulted on the Capex Loan repayments and interest payments in June 2024.
The equity infusion of ₹10,300 crore into RINL will help it overcome the operational problems related to raising working capital and start blast furnace operations most productively. “This would allow the company to gradually reach its full production capacity which is critical and is in the national interest to have stability in the Indian steel market by augmenting steel production and also save the livelihoods of employees (regular and contractual) and those dependent on the operations of the steel plant,” the Ministry of Steel stated.
Steel production is a core sector of the economy and is one of the indicators of economic development of any country, and the Ministry of Steel claimed this strategic decision underscores the Government’s steadfast commitment to supporting indigenous industries for Atmanirbhar Bharat.
– global bihari bureau
