Saturday, December 7, 2024

Government Infuses Rs 1,650 Crore into RINL Amid Financial Troubles – N.F Times


New Delhi: The government has injected approximately Rs 1,650 crore into the state-owned RINL, which is facing significant operational and financial challenges, as per an official document. The Ministry of Steel has noted that various actions are being undertaken to maintain RINL’s operations.

According to the document, “The Government of India contributed Rs 500 crore in equity on September 19, 2024, and provided a working capital loan of Rs 1,140 crore on September 27, 2024.”

The document also mentions that SBICAPS, a subsidiary of the State Bank of India, is developing a report on RINL’s viability.

The note further states, “With RINL in dire financial straits, the Ministry of Steel is actively consulting with the Ministry of Finance to implement measures to sustain RINL’s operations.”

Rashtriya Ispat Nigam Ltd (RINL), operating under the Ministry of Steel, is a steel production enterprise. It operates a 7.5 million tonne capacity plant located in Visakhapatnam, Andhra Pradesh, and is currently grappling with acute financial and operational difficulties.

Two out of three blast furnaces were shut down until October 2028, when the second furnace was operationalized after a 4-6 month hiatus. RINL’s debts have exceeded Rs 35,000 crore.

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

The decision to privatise has met with opposition from workers’ unions, which argue that one of the main reasons for the company’s crisis is the lack of captive iron ore mines.

“RINL has never possessed captive mines. Unlike us, all other primary steel producers who use blast furnaces benefit from having captive mines, which aids in reducing raw material costs. We have always purchased iron ore at market prices, to which transportation costs are also added,” stated J Ayodhya Ram, a union leader opposing the privatisation of RINL.


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