Union Steel Minister HD Kumaraswamy on Friday said the Union Cabinet has approved a Rs 11.44 billion turnaround package for Rashtriya Ispat Nigam Ltd to help the ailing steelmaker come out of trouble. He said he did.
He also said that the issue of privatizing steel companies will not arise.
“The Visakhapatnam Steel Plant holds a special place in the hearts of the people of Andhra Pradesh.The cabinet meeting yesterday decided to provide equity support of over Rs 10,000 crore to the steel plant. This has been done with the understanding of the importance of “Steel sector in the construction of Atmanirbhar Bharat,” Prime Minister Narendra Modi said in a post on X. In January 2021, the Cabinet Committee on Economic Affairs stated that the Ministry of Finance (CCEA) has confirmed that the government of Rashtriya Ispat Nigam Ltd. (RINL), which is under debt under the Ministry of Steel, has not made good progress in terms of finances and business operations. Approved to sell 100% of shares.
Addressing a press conference in the capital, Kumaraswamy said the Cabinet Committee on Economic Affairs, chaired by the Prime Minister, on Thursday approved the Rs 11.44 billion RINL reconstruction plan.
“There will be no privatization issue in RINL (after capital infusion). That’s why we actually persuaded the Chief Minister to take the decision. Based on that, we expressed the feelings of our brothers and sisters in Andhra Pradesh. We have convinced the Prime Minister that we actually respect the people of Andhra Pradesh,” Kumaraswamy said in response to a question related to the government’s plan to privatize RINL.
Kumaraswamy said the package was made possible due to active support from the Prime Minister, adding that they had held several review meetings to consider possible options for the survival of RINL.
“I have met several times with the finance minister and banking officials. But finally today, the package has been announced.” Sharing his vision for RINL’s future, Mr. Kumaraswamy said, He said the company is taking on the challenge of becoming the top steel producer in the country.
“We are going to successfully prove that the Visakhapatnam plant will become the number one plant in India for steel production. That is my challenge and I have been working towards it,” he said.
RINL’s 7.5 million tonne steel plant in Visakhapatnam, Andhra Pradesh, has been facing serious financial and operational problems in recent years. Two of the three blast furnaces (BF) were shut down until October 2024, and the second blast furnace was commissioned almost four to six months later. The total dues of RINL were over Rs 35,000 crore.
According to the minister, from July to August this year, all three furnaces were operational and the production rate was over 92 percent.
Commenting on the reasons behind RINL’s situation, Kumaraswamy said that the company was operating smoothly till its production capacity reached 3 MTPA.
“The problem started when they (RINL management) decided to expand the production from 3 million tonnes to 6.3 million tonnes in 2014-15 and they received 13% interest from various banks. It raised a loan of Rs 11,000 crore.
“They had no captive mining to operate the plant. They have to buy raw materials (8:36) from the open market. Then again in 2016-2017, they We raised our plans to expand to 7.3 tonnes… Now, actually, RINL’s downfall began after we aimed for this expansion,” he said.
Kumaraswamy also said the ministry is working to acquire several iron ore mines for RINL for captive use in Odisha.
Meanwhile, Railway Minister Ashwini Vaishnau said in a statement that the revival package will resolve many of the heritage issues that RINL faced in the past. At the same time, significant efforts will be made to secure raw materials and modernize the plant for RINL.
The overall Rs 11,440-crore package includes fresh equity infusion of Rs 10,300-crore and conversion of working capital loans into preference share capital of Rs 1,140-crore. This will greatly benefit all RINL employees and all those associated with RINL’s economic activities and Andhra Pradesh will see major steel mills revived within the next few days, he said.
