The government has approved an infusion of Rs 11,440 crore in the state-run Rashtriya Ispat Nigam Ltd (RINL) as equity to keep it a going concern, Parliament was informed Friday.
The entire additional capital has come from the government and does not not involve any private sector partnership or collaboration, minister of state for steel Bhupathiraju Srinivasa Varma said in reply to a question in Rajya Sabha.
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An amount of Rs 6,783 crore has been released to RINL in January, 2025. The balance will be released in quarterly tranches till October, 2025.
There was a plan to privatise RINL, also known as Vizag Steel, but this has been put in abeyance after the return of Telugu Desam Party (TDP to power in Andhra Predesh, in alliance with the Bharatiya Janata Party. The BJP, which doesn’t have a majority of its own in the Lok Sabha, is dependent on TDP and JD(U).
The net worth of the company has been completely eroded and now stands at (-) Rs 4538 crore
due to the accumulation of losses over the years. Its turnover declined by 19% on year to Rs 22,778 crore in F23. In FY24, it recorded turnover of Rs 23,129 crore. The company has been facing a severe working capital crunch.
In February 2021 the cabinet had approved the privatisation of RINL, in line with the new public enterprise policy which listed steel manufacturing as a non-strategic sector.
TDP, which otherwise pushes for a public-private partnership model for the development of the state, has opposed the privatisation of the plant. The plant is struggling due to a lack of captive mines for iron ore and coal, cyclic markets and the liquidity crisis.
The Centre had earlier infused Rs 1,600 crore into the steel plant late last year including Rs 500 crore in equity and Rs 1100 crore in working capital loans to keep it afloat.
Currently, the RINL plant has a 7 million tonnes (MT) capacity, which can be expanded up to 17 MT if fresh investment is pumped in. It has a massive land pool of 19,000 acres which includes a 6,000-acre green belt. Currently the plant is running below capacity.
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