RINL faces mounting financial strain amid weak steel market
Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), is facing mounting financial pressure as weak steel prices, sluggish demand, and dwindling cash reserves erode its liquidity and disrupt operations.
With cash reserves understood to have fallen below ₹100 crore, the company is struggling to meet payments to raw material suppliers, raising concerns over its ability to sustain operations and access affordable credit, according to officials familiar with the matter.
Officials said delays in supplier payments could weaken the company’s credit profile, increasing borrowing costs. Interest rates on loans, currently around 7%, could rise to 11-12% if RINL’s credit rating is downgraded, they said.
The weak market has also affected sales. Although RINL sought higher procurement of VSP steel for Amaravati development works, demand has reportedly remained below expectations, further tightening the company’s cash flow.
As financial pressures intensify, the management has stepped up cost-control measures. In a communication to employees on Saturday, Chairman and Managing Director Atul Bhatt said eliminating wastage and reducing operational expenses must remain the company’s immediate priority.
He directed departments to improve raw material utilization; minimize the consumption of high-cost inputs in the Sinter Plant, Blast Furnace, and Steel Melting Shop; conserve coke breeze, metallurgical coke, and pet coke; and maximize the use of Pulverized Coal Injection (PCI) technology as a substitute for coke wherever feasible.
The company is also grappling with operational constraints. Sources said that because some production units are only partially working, there isn’t enough process gas for the downstream facilities, which is stopping the finishing mills from running at full capacity. The resulting accumulation of pellets and blooms has further constrained the production of finished steel. Employees have been told that the immediate focus is to increase production while reducing costs and minimizing wastage.
The latest developments have renewed scrutiny of measures introduced over the past two years to revive the plant. During this period, the Ministry of Steel closely monitored production, operating costs, workforce deployment, and productivity. The measures included restarting a blast furnace during the monsoon, reportedly at the ministry’s direction, and workforce rationalization through the disengagement of contract workers. However, these initiatives have yet to deliver a meaningful improvement in the company’s financial or operational performance.
Sources also questioned the procurement of allegedly substandard raw materials, saying it contributed to a major accident at the plant. As the turnaround strategy continues to fall short of expectations, the latest setbacks have intensified calls for a review of key decisions made in recent years and for fixing accountability if investigations establish procedural or managerial lapses.