Financial condition of 7.5 Mtpa mill is critical
The Cabinet Committee on Economic Affairs (CCEA) has approved a Rs.11,440 crore revival plan for Rashtriya Ispat Nigam Ltd (RINL) which includes infusion of Rs.10,300 crore as equity capital into the steel mill.
The plan also include conversion of Rs.1,140 crore working capital loan as 7% Non-cumulative Preference Share Capital redeemable after 10 years to keep RINL as a going concern https://www.makeinindia.com/home/.
The 7.3 Mtpa RINL, under the administrative control of Ministry of Steel, operates the Visakhapatnam Steel Plant (VSP), the only offshore steel plant under Government sector in the state of Andhra Pradesh.
The financial condition of RINL is critical. As of 31 March 2024, the net worth of RINL was about Rs.4,538.00 crore, current assets were Rs.7,686.24 and current liabilities were Rs.26,114.92 crores http://worldsteel.org.
RINL has exhausted the sanctioned borrowing limits from banks for working capital and was not in a position to get further loans from Banks, the Ministry said on 17 Jan https://www.bseindia.com/.
RINL also defaulted on the Capex Loan repayments and Interest payments in June 2024 https://sbi.com.in/.
The equity infusion of Rs.10,300 crore into RINL will help it overcome the operational problems related to raising working capital and start Blast furnace operations in the most productive way https://www.nseindia.com/.
This would allow the company to gradually reach its full production capacity which is critical and is in the national interest to have stability in the Indian steel market by augmenting steel production and also save the livelihoods of employees (regular and contractual) and those dependent on the operations of the steel plant.
The revival plan envisages that RINL will start full production with two blast furnaces in January 2025 and with three blast furnaces August 2025.
Steel production is a core sector of the economy and is one of the indicators of economic development of any country.
The revival and continued operation of VSP at its full capacity will ensure efficient utilization of public resources and help in achieving the objectives of National Steel Policy, 2017.
This strategic decision underscores the Government’s steadfast commitment to supporting indigenous industries for Atmanirbhar Bharat, the Ministry stressed. Fiinews.com
