New Delhi: The Union Cabinet has approved a comprehensive revival package worth Rs 11,440 crore for Rashtriya Ispat Nigam Limited (RINL), commonly known as the Visakhapatnam Steel Plant. The decision was taken by the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, to address the challenges faced by the debt-laden public sector steel producer.
According to an official statement, the package includes an equity infusion of Rs 10,300 crore and the conversion of Rs 1,140 crore in working capital loans into 7 percent non-cumulative preference share capital. The preference shares will be redeemable after 10 years, ensuring the continuity of RINL’s operations.
Boost to Operational Capacity
Minister for Information and Broadcasting Ashwini Vaishnaw highlighted that the revival plan aims to resolve many of RINL’s legacy issues. The equity infusion will bolster the company’s ability to secure working capital and restart blast furnace operations efficiently.
The government’s intervention is expected to help RINL gradually achieve its full production capacity. Currently, RINL operates the Visakhapatnam Steel Plant, the only shore-based steel plant in Andhra Pradesh, with an installed liquid steel production capacity of 7.3 million tonnes per annum (Mtpa). As per the approved timeline, the plant is slated to resume full production with two blast furnaces by January 2025 and three by August 2025.
National and Economic Significance
The revival package underscores the critical role RINL plays in India’s steel market. By augmenting domestic steel production, the government aims to ensure market stability and safeguard the livelihoods of thousands of employees, both regular and contractual, and others dependent on the plant’s operations.
Financial Challenges Addressed
RINL’s financial condition had reached a critical stage. The company had exhausted its sanctioned borrowing limits for working capital and defaulted on capital expenditure loan repayments and interest payments in June 2024. This revival package is expected to address these financial challenges, providing much-needed stability to the company’s operations.
Strategic Importance of RINL
Under the administrative control of the Ministry of Steel, RINL is a key player in India’s steel industry. The approved revival plan not only ensures the continued operation of the Visakhapatnam Steel Plant but also aligns with the government’s broader objective of enhancing domestic industrial capacity and self-reliance in critical sectors.
The initiative reflects the government’s commitment to preserving strategic public sector enterprises and fostering growth in India’s manufacturing sector.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)