NEW DELHI: With privatisation of Rashtriya Ispat Nigam Ltd (RINL) put on the back burner, the Centre is working on a package for the steel maker that would involve fresh equity infusion, restructuring of bank loans, and setting operational goals for the top management, sources told FE.
The privatisation plan for RINL, also known as Vizag Steel, has been hanging on fire for years due to lack of cooperation from Andhra Pradesh government. With the return of Telugu Desam Party (TDP) government in alliance with the Bharatiya Janata Party in the state, the Centre is making a new bid to revive the firm.
Though not a non-performing asset (NPA) account yet, the finances of Vizag Steel are not sound. In the past one-and-half months, the Centre has infused Rs 500 crore in equity and extended Rs 1,100 crore in working capital loans to enable RINL to pay some dues to state-run banks and to remain afloat.
RINL incurred a loss of Rs 2,859 crore in FY23 and its plant capacity was running much below the 7MT capacity. Its secured and unsecured loans were about Rs 20,000 crore as of FY23.
“A hard look is being taken at how it will remain a going concern,” a senior official said. The package would be based on a feasibility study being carried out by banks, the official added. RINL is wholly owned by the Centre.
The company’s net worth has fallen to just Rs 391 crore in FY23 from a high of Rs 13,659 crore in FY12, due to the accumulation of losses over the years. Its turnover declined by 19% on year to Rs 22,778 crore in F23. The company is now facing a severe working capital crunch.
Last month, state-run MOIL chairman Ajit Kumar Saxena took on the additional role of CMD of RINL as part of the effort to reshuffle the top management of the company to infuse new life into the steelmaker. More changes in the top management are in the offing, another official said.
It is learnt that banks have tasked consultancy firms SBI Caps and MECON, who are preparing a technical feasibility report on Vizag Steel in terms of its capacity utilisation, what could be done to enhance capacity utilisation, and what would the break-even point, among others.
“When the rehabilitation package is ready, Steel Ministry will go to the Cabinet for approval,” the first official said.
Contrary to reports, sources said a merger of RINL with another state-run steel maker the Steel Authority of India (SAIL) might not be in the interest of the latter.
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.
Source: The Financial Express
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