RINL Revival Package Announced

January 18, 2025

Recently, the Government of India announced revival package for Rashtriya Ispat Nigam Ltd (RINL), a state-owned steel manufacturer facing severe financial difficulties. The ₹11,440 crore package aims to restore the company’s operations and safeguard thousands of jobs amid political pressure and economic challenges.

Background of RINL

RINL, also known as Vizag Steel, is located in Vishakhapatnam, Andhra Pradesh. It has a production capacity of 7.3 million tonnes per annum. The plant operates three blast furnaces, with two currently in operation. RINL has been struggling financially, reporting a negative net worth and debt.

Details of the Revival Package

The revival package includes ₹10,300 crore as equity infusion and ₹1,140 crore as working capital. The working capital will be converted into non-cumulative preference shares redeemable after ten years. This financial support is one of the largest in the recent history of Indian public sector undertakings.

Political Influence and Support

The push for the package was led by Andhra Pradesh Chief Minister N. Chandrababu Naidu and Union Steel Minister H. D. Kumaraswamy. Their political alliances were crucial in persuading the central government to approve the financial support, which was seen as a commitment to the people of Andhra Pradesh.

Impact on Employment

The revival of RINL is expected to protect the jobs of approximately 30,000 to 35,000 workers, including both permanent and contractual staff. The financial support aims to stabilise the company and ensure job security for its employees.

Financial Challenges Faced by RINL

As of March 2024, RINL had a debt exceeding ₹25,000 crore and was defaulting on loan repayments. Current liabilities were higher than current assets, indicating severe financial strain. The new capital infusion is intended to address these operational challenges.

Future Prospects

The revival package aims to enhance capacity utilisation to nearly 92.5% over the next 18-24 months. A second tranche of funding may be considered based on RINL’s performance post-infusion. The operationalisation of all three blast furnaces is a key goal of the revival efforts.

Conclusion of Events

The approval of the RINL revival package marks important step in addressing the challenges faced by the steel manufacturer. The collaboration between state and central government officials marks the importance of political support in reviving struggling public sector enterprises.

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