The India government has approved an investment of 114.4 billion rupees (US$1.3 billion or RM5.85 billion) to revive state-owned steelmaker Rashtriya Ispat Nigam Ltd by injecting 103 billion rupees as equity by buying shares of the company. A working capital debt of 11.4 billion rupees will be converted into preference shares.
(Jan 17): India has approved an investment of 114.4 billion rupees (US$1.3 billion or RM5.85 billion) to revive state-owned steelmaker Rashtriya Ispat Nigam Ltd (RINL) that’s struggling to survive in the face of financial hardships.
The government will inject 103 billion rupees as equity by buying shares of the company, according to a steel ministry statement. A working capital debt of 11.4 billion rupees will be converted into preference shares, it added.
“The financial condition of RINL is critical,” according to the statement. As of March last year, the company had a negative networth of 45.4 billion rupees and the producer’s liabilities had swollen to more than three times its assets. In June, the company defaulted on repayments of project loans and cannot raise any new debt.
The revival plan follows demands by employees to either merge it with bigger rival Steel Authority of India Ltd or allocate some captive iron ore mines to insulate the southern Indian company from fluctuating costs. It reported a loss of 28.9 billion rupees in the financial year through March 2023.
The recent slump in prices of the alloy has exacerbated its pain. Benchmark prices of hot-rolled coils, a bellwether product for the industry, have plummeted almost 35% over the past year.
Funds from the government will help the company to start two blast furnaces from this month, and ramp up operations to three furnaces by August, the ministry said.
RINL’s mill is located in the southern Indian city of Visakhapatnam and has a capacity to annually produce 7.3 million tonnes of liquid steel.
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