The Government is considering merger of RINL with another state-owned steel company SAIL as one of the options to ensure survival of RINL’s plant and resolve the financial and operational issues being faced by the Andhra Pradesh-based steel maker, sources said.
To provide capital for continuity of operations at the RINL’s steel plant, plans like sale of land parcel to NMDC and bank loans are also being worked out, they told PTI.
The DFS secretary, steel secretary and top officials of public sector lender SBI also held a meeting recently over the RINL issue. SBI has significant loan exposure to RINL.
“The government wants to provide a permanent solution to the issue. One of the options being discussed is the merger of RINL with SAIL,” the sources said.
Rashtriya Ispat Nigam Ltd (RINL), under the Ministry of Steel, owns and operates a 7.5 million tonnes plant at Visakhapatnam in Andhra Pradesh. It holds the distinction of being India’s first shore-based integrated steel plant.
SAIL (Steel Authority of India Limited) also comes under the steel ministry.
Sources further said that arranging capital for operations are also being considered, besides other measures like having talks with lenders for financial assistance and monetising assets through sale of a land parcel of 1,500-2,000 acre to NMDC for a pellet plant.
Unlike other primary steel makers, RINL never had the advantage of having captive iron ore mines. Workers union say this is one of the major reasons for the crisis being faced by RINL.
“RINL never had captive mines. All other primary steel makers who make steel through blast furnace enjoy benefit of captive mines which helps with cost of raw material. We have always bought iron ore at market price,” said J Ayodhya Ram, leader of a union protesting against privatisation of RINL.
In January 2021, the Cabinet Committee on Economic Affairs (CCEA) gave its ‘in-principle’ approval for 100 per cent disinvestment of government stake in RINL, also called Visakhapatnam Steel Plant or Vizag Steel, along with RINL’s stake in its subsidiaries/joint ventures through strategic disinvestment by way of privatisation.
According a steel ministry document, RINL is in serious financial trouble. It has been running at minimal capacity and facing continuous losses. The overall dues of RINL have gone above Rs 35,000 crore and it is at the risk of being classified as non-performing asset by banks.
The document said that the ministry is taking steps to keep RINL as a ‘going concern’ in consultation with the finance ministry.
RINL has three blast furnaces (BF) of 2.5 MT each. Only BF no. 2 is in operation out of three furnaces. (PTI)
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