Centre Approves ₹11,440 Crore Revival Package for Rashtriya Ispat Nigam Ltd
Revival Package Approved
The Union Cabinet has approved a significant revival package of ₹11,440 crore for Rashtriya Ispat Nigam Ltd (RINL), aimed at addressing the financial challenges faced by the steelmaker. Union Steel Minister HD Kumaraswamy has clarified that the privatization of RINL is not under consideration. The Visakhapatnam Steel Plant is of great importance to the people of Andhra Pradesh.
Financial Support and Aatmanirbhar Bharat
The Cabinet's decision includes providing equity support of over ₹10,000 crore for the plant. Prime Minister Narendra Modi emphasized that this decision supports the vision of an Aatmanirbhar Bharat. It is important to note that in January 2021, the Cabinet Committee on Economic Affairs (CCEA) had approved the full disinvestment of government stakes in RINL due to its financial struggles.
Focus on Revitalization
Kumaraswamy stated that the CCEA, under the Prime Minister's leadership, approved RINL's revival plan, emphasizing that privatization is off the table following this capital infusion. He also highlighted that the decision respects the sentiments of the citizens of Andhra Pradesh. He also expressed his commitment to making the Visakhapatnam Steel Plant the leading steel producer in India.
Operational Challenges
RINL's 7.5 million tonne steel plant in Visakhapatnam has been grappling with severe financial and operational issues. Two of the three blast furnaces were non-operational until October 2024, when one resumed operations. RINL's total dues have exceeded ₹35,000 crore.
Operational Improvements
The minister expects that all three furnaces will be operating at over 92% capacity by July-August of this year. He explained that RINL operated smoothly with a capacity of 3 MTPA but faced difficulties after expanding to 6.3 million tonnes in 2014-15, leading to significant loans and high interest rates without captive mining facilities. Further expansion plans in 2016-17 worsened RINL's problems.
Kumaraswamy mentioned that efforts are underway to secure iron ore mines in Odisha for RINL's captive use. Union Minister of Railways Ashwini Vaishnaw also commented that this revival package will help resolve many of RINL's long-standing issues.
Financial Restructuring
The ₹11,440 crore package includes a fresh equity infusion of ₹10,300 crore and the conversion of working capital loans into preferred share capital worth ₹1,140 crore. This move is expected to benefit RINL employees and related economic activities. The focus will also be on securing raw materials and modernizing the plant. This revival package is designed to restore this major steel plant in Andhra Pradesh, ensuring its contribution to India's steel sector growth.
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