Union Cabinet clears Rs 11,440 Crore Plan for Reviving Rashtriya Ispat Nigam
Cabinet Committee on Economic Affairs (CCEA) has approved a Rs. 11,440 crore revival plan for Rashtriya Ispat Nigam Ltd. (RINL).
RINL, also known as Vizag Steel, is a central public sector undertaking under Ministry of Steel, Government of India. The company is based in Visakhapatnam, India.
Union Cabinet’s Revival Plan on Rashtriya Ispat Nigam
Union Cabinet’s revival plan includes a fresh equity infusion of Rs 10,300 crore. Further, as a part of this revival plan, a working capital loan of Rs. 1,140 crore will be converted into non-cumulative preference share capital, redeemable after 10 years.
Equity Infusion to Resolve RINL’s Working Capital Issues
As mentioned in the Ministry of Steel’s PIB release dated 17th January 2025, “the financial condition of RINL is critical”. The company reported a negative net worth of Rs. 4,538 crore in FY-24. RINL has assets worth Rs. 7,686.24 crore and liabilities of Rs. 26,114.92 crore. It is also important to note that RINL has used up all the bank loans approved for working capital and is unable to get more loans from banks.
As per the revival plan, the Rs. 10,300 crore equity infusion will help RINL solve its working capital issues and allow it to start blast furnace operations.
RINL’s 7.3 MMTPA liquid Steel Capacity Expected to Start by August 2025
RINL has a liquid Steel production capacity of about 7.3 Million Metric Tonnes Per Annum (MMTPA) in Vishakhapatnam, Andhra Pradesh. Following the revival plan, the company is expected to start operations with all three of its blast furnaces operational by August 2025.
Brief Background of RINL’s Financial Struggles
The company started facing financial crisis after expanding its capacity from 3 Million Metric Tonnes Per Annum (MMTPA) to 7.3 MMTPA between 2014 and 2017. This expansion was financed through high-interest loans. Furthermore, due to lack of captive iron ore mines, the company relied on costly raw materials from the open market, which added additional pressure to RINL’s financial situation.
Later, in January 2021, the Cabinet Committee on Economic Affairs (CCEA) had granted ‘in-principle’ approval for the complete disinvestment of the government’s stake in RINL. However, the government later chose not to proceed with the privatization. In November 2024, the Government had infused around Rs. 1,650 crore into the company.
About Rashtriya Ispat Nigam Ltd.: Rashtriya Ispat Nigam Limited, founded in 1982, is headquartered in Visakhapatnam, Andhra Pradesh. The company is a public sector steel company in India and is also known as Vizag Steel. RINL is primarily engaged in the production of steel and serves various industries such as construction, automotive, and infrastructure.