Union Cabinet approves Rs 11,440 cr revival package for Vizag Steel
New Delhi: The Union Cabinet has approved a Rs 11,440 crore package to revive the debt-laden Rashtriya Ispat Nigam Limited (RINL), also known as Vizag Steel, the government announced on Friday.
Union Minister of Information and Broadcasting, Ashwini Vaishnaw, stated that the package aims to resolve many of RINL's longstanding challenges.
The revival plan includes Rs 10,300 crore as equity capital infusion and the conversion of Rs 11,440 crore in working capital loans into 7% non-cumulative preference shares, redeemable after 10 years.
According to an official Cabinet statement, these measures aim to keep RINL operational.
RINL operates the Visakhapatnam Steel Plant (VSP), the only offshore steel plant under the government sector in Andhra Pradesh, with an installed capacity of 7.3 million tonnes per annum (mtpa) of liquid steel.
The Centre highlighted that RINL's financial condition remains critical.
At the end of FY24, the PSU reported a negative net worth of Rs 4,538 crore, with current assets of Rs 7,686.24 crore and liabilities amounting to Rs 26,114.92 crore.
Vaishnaw noted that efforts would also focus on securing raw materials and modernising the plant to ensure long-term sustainability.
The equity infusion is expected to address operational challenges, such as raising working capital, enabling RINL to restart its blast furnaces and gradually achieve full production capacity.
The Cabinet stated that stabilising RINL is essential for maintaining balance in the Indian steel market, augmenting production, and safeguarding the livelihoods of its employees, both regular and contractual.
As part of the revival strategy, RINL aims to resume operations of two blast furnaces by January 2025, with all three blast furnaces expected to be operational by August 2025.
In the past, RINL has resorted to short-term measures to address its financial woes.
Last year, it sold its forged wheel plant in Raebareli to Indian Railways for Rs 2,250 crore, using the proceeds to repay bank loans.
However, the plant's underperformance led the Railways to import forged wheels for semi-high-speed trains like Vande Bharat.
Following the Russia-Ukraine war, these imports were sourced from China.
The Cabinet emphasised that revitalising VSP to operate at full capacity aligns with the objectives of the National Steel Policy, 2017, ensuring efficient utilisation of public resources and contributing to India’s steel production goals.
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