SBI clears restructuring plan to help Vizag steel company get back on track

The restructuring plan will make things easier for RINL by lowering the amount of money it needs to keep as margin and reducing interest rates on its loans

The State Bank of India (SBI) board has approved a major plan to help Vizag’s government-owned steel company, Rashtriya Ispat Nigam Limited (RINL), recover from financial distress. This move is expected to encourage other public sector banks to follow suit and is seen as a significant step in the company’s revival, according to a report by The Economic Times.

 

The restructuring plan will ease pressure on RINL by lowering its margin money requirements and reducing interest rates on its loans.

 

“The government has done its bit by infusing some cash. The company is now a standard account with repayments ahead of schedule, so banks are in a better position to offer some relief via restructuring. With SBI now approving the plan, other public sector banks are also seeking board approval for the same,” a person familiar with the developments told The Economic Times.

 

Last year, the central government provided a financial boost to RINL by injecting over ₹6,000 crore as part of an ₹11,440 crore support package. This helped the company repay some of its loans on time, facilitating the restructuring of its remaining debt.

 

SBI took over as the lead lender from Union Bank of India in January and is now heading a consortium of public sector banks working to revive RINL. The total outstanding bank loans to RINL exceed ₹20,000 crore, with SBI alone having extended ₹6,400 crore.

 

According to the report, the revival plan, prepared by SBI Capital Markets, aims to make RINL’s debt more manageable. Key elements include increasing the plant’s production capacity, reducing the number of contract workers, and bringing down interest rates from the current 14–15 per cent to below 9 per cent.

 

RINL operates a 7.5 million tonne steel plant in Vizag, Andhra Pradesh. The company was on the verge of being classified as a non-performing asset (NPA) in June last year after delaying payments by over 60 days. The government’s capital support helped rectify the situation.

 

SBI’s plan also reduces the margin money requirement, enabling RINL to borrow more for its operations. Bankers note that two of the plant’s three blast furnaces are already running at full capacity, indicating that RINL is doing its part.

 

Support from other government entities such as NMDC (for raw materials) and SAIL (for marketing and sales) has also contributed to RINL’s recovery. Currently, AK Saxena, Chairman of MOIL, is overseeing RINL’s leadership duties.