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Government Infuses Rs 1,650 Crore into RINL Amid Financial Troubles
ECONOMY & POLICY

Government Infuses Rs 1,650 Crore into RINL Amid Financial Troubles

The government has infused around ?16,500 million into state-owned Rashtriya Ispat Nigam Ltd (RINL), which is grappling with operational and financial challenges, according to an official document. The government is also implementing various measures to sustain RINL as a viable entity, as noted by the Ministry of Steel.

"In this regard, the Government of India has infused ?5,000 million (?500 crore) towards equity on September 19, 2024, and a working capital loan of ?11,400 million on September 27, 2024," the document stated.

It also mentioned that SBICAPS, a wholly-owned subsidiary of the State Bank of India (SBI), is preparing a report on the sustainability of RINL.

"RINL is in serious financial trouble, and the Ministry of Steel is taking several steps to maintain RINL as a going concern in consultation with the Ministry of Finance," it added.

Rashtriya Ispat Nigam Ltd, under the Ministry of Steel, is a steel manufacturing company that operates a 7.5 million tonne plant in Visakhapatnam, Andhra Pradesh. The company has been facing significant financial and operational difficulties.

As of late October 2024, two of the three blast furnaces (BF) were closed, with the second BF operationalized after nearly four to six months. RINL's total dues have exceeded ?350,000 million.

In January 2021, the Cabinet Committee on Economic Affairs (CCEA) granted 'in-principle' approval for the 100% disinvestment of the government stake in RINL, also known as Visakhapatnam Steel Plant or Vizag Steel, along with RINL's stake in its subsidiaries and joint ventures through strategic disinvestment via privatization.

The government's decision to privatize the company has faced backlash from workers' unions, who argue that RINL's lack of captive iron ore mines is a major contributor to its ongoing crisis.

"RINL has never had captive mines. All other primary steel producers using blast furnaces benefit from captive mines, which significantly reduces their raw material costs. We have always purchased iron ore at market prices, adding transportation costs," stated J. Ayodhya Ram, a leader of a union protesting against RINL's privatization.

The government has infused around ?16,500 million into state-owned Rashtriya Ispat Nigam Ltd (RINL), which is grappling with operational and financial challenges, according to an official document. The government is also implementing various measures to sustain RINL as a viable entity, as noted by the Ministry of Steel. In this regard, the Government of India has infused ?5,000 million (?500 crore) towards equity on September 19, 2024, and a working capital loan of ?11,400 million on September 27, 2024, the document stated. It also mentioned that SBICAPS, a wholly-owned subsidiary of the State Bank of India (SBI), is preparing a report on the sustainability of RINL. RINL is in serious financial trouble, and the Ministry of Steel is taking several steps to maintain RINL as a going concern in consultation with the Ministry of Finance, it added. Rashtriya Ispat Nigam Ltd, under the Ministry of Steel, is a steel manufacturing company that operates a 7.5 million tonne plant in Visakhapatnam, Andhra Pradesh. The company has been facing significant financial and operational difficulties. As of late October 2024, two of the three blast furnaces (BF) were closed, with the second BF operationalized after nearly four to six months. RINL's total dues have exceeded ?350,000 million. In January 2021, the Cabinet Committee on Economic Affairs (CCEA) granted 'in-principle' approval for the 100% disinvestment of the government stake in RINL, also known as Visakhapatnam Steel Plant or Vizag Steel, along with RINL's stake in its subsidiaries and joint ventures through strategic disinvestment via privatization. The government's decision to privatize the company has faced backlash from workers' unions, who argue that RINL's lack of captive iron ore mines is a major contributor to its ongoing crisis. RINL has never had captive mines. All other primary steel producers using blast furnaces benefit from captive mines, which significantly reduces their raw material costs. We have always purchased iron ore at market prices, adding transportation costs, stated J. Ayodhya Ram, a leader of a union protesting against RINL's privatization.

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