Cabinet Approves ₹11,440 Crore Revival Package for Debt-Ridden RINL

The Union Cabinet has sanctioned a substantial ₹11,440 crore package to revitalize Rashtriya Ispat Nigam Limited (RINL), commonly known as Vizag Steel, addressing its critical financial challenges.

Crux

This strategic intervention aims to infuse ₹10,300 crore as equity capital into RINL and convert ₹1,140 crore of its working capital loans into 7% non-cumulative preference share capital, redeemable after a decade. This initiative is expected to resolve many of RINL’s longstanding operational issues.

Key Details

Financial Health of RINL: As of March 31, 2024, RINL reported a net worth of ₹(-)4,538 crore, with current assets at ₹7,686.24 crore and current liabilities at ₹26,114.92 crore. The company had exhausted its sanctioned borrowing limits and defaulted on capital expenditure loan repayments and interest payments in June 2024.

Operational Plans: The revival plan outlines that RINL will commence full production with two blast furnaces in January 2025 and expand to three blast furnaces by August 2025. This phased approach is designed to stabilize the Indian steel market by augmenting steel production and safeguarding the livelihoods of employees and those dependent on the plant’s operations.

Strategic Measures: In addition to financial support, efforts will be made to secure raw materials and modernize the plant, ensuring its long-term sustainability and competitiveness in the steel industry.