Bailing out a PSU: Govt's equity infusion in RINL signals a shift in policy

Last week, the Union Cabinet Committee on Economic Affairs approved a financial package of Rs 11,440 crore to revive the ailing Rashtriya Ispat Nigam Limited (RINL), a state-owned enterprise that operates the Visakhapatnam Steel Plant. The package included an equity infusion of Rs 10,300 crore into RINL and the conversion of Rs 1,140 crore of its working-capital loans into 7 per cent non-cumulative preference share capital that could be redeemed after 10 years.

 

During the current year, RINL’s total liabilities have risen to over Rs 35,000 crore, with defaults on its loan repayment and interest payment. Therefore, last week’s decisions