Govt Approves ₹11,440 Cr Lifeline for Vizag Steel, Rules Out Immediate Merger with SAIL, NMDC

Govt approves ₹11,440 cr lifeline for Vizag Steel, rules out immediate merger with SAIL, NMDC Sorting out Visakhapatnam Steel Project finances Rashtriya Ispat Nigam Limited (RINL), also referred to as Vizag Steel. The financial support comes as the company grapples with extreme financial challenges, marked by increasing losses as well as a huge debt load in a bid to keep its operations running.

RINL (Rashtriya Ispat Nigam Limited), based in Visakhapatnam, Andhra Pradesh, is a shore-based integrated steel plant, the first of its type in India, and a significant contributor to the national steel production segment. Yet years of operational inefficiency and spiraling costs led the company into a financial crisis. RINL had a negative net worth of ₹(-)4,538 crore, as of March 31, 2024, and had current liabilities of over ₹26,000 crore without any limits for bank borrowings.

The green-lit capital infusion comes after the Cabinet Committee on Economic Affairs approved RINL’s revival plan earlier this year. The financing does not include any level of participation by the private sector, according to Minister of State for Steel, Bhupathiraju Srinivasa Varma. He stressed that the infusion is vital to keeping the plant running, and to jobs in the region.

Replying to questions in the Rajya Sabha, MoS Varma said the government regularly reviews the performance of public sector undertakings (PSUs), but at this time, it had no plans to merge RINL with other state-owned steel-makers such as Steel Authority of India Ltd (SAIL) or NMDC Steel Ltd (NSL). This is despite Rs. 25,000 crore steel plant operator RINL seeing merger reports with SAIL in 2023.

RINL reported ₹2,859 crore in loss in FY 2022-23, bogged down also by loan servicing defaults of ₹410.5 crore. The government hopes the new injections of capital will stabilize the company’s finances and allow it to be more competitive in the volatile steel market.

This intervention reflects the Centre’s efforts to support strategic PSUs and ensure the future of the steel industry in India.