State-owned long product steel maker, Rashtriya Ispat Nigam Ltd (RINL), has utilised the first tranche of nearly ₹6,800-7,000 crore, with around ₹5,300 crore allocated towards meeting payment obligations to prevent working capital loan defaults and subsequent higher interest payouts, an internal report of the company accessed by businessline shows.
RINL’s loans were sanctioned at a high interest rate of 10–11.5 per cent, which requires revision for the entity’s turnaround, a point raised by the Union Steel Ministry HD Kumaraswamy in multiple meetings.
“In February, the RINL CMD had written to SBI to reduce interest rates and align them between 7 and 7.75 per cent, at par with industry peers,” an official said.
The steelmaker, after securing the funds, has also managed to be back in the black, reporting a gross margin or EBITDA of ₹55 crore in January 2025 compared to an EBITDA loss of nearly ₹300 crore in the same period last year.
As of January-end, SBI holds the largest exposure at over ₹5,000 crore (including capex and working capital requirements), followed by Canara Bank at ₹1,600-odd crore. Indian Bank has the third-highest exposure of around ₹1,000 crore.
Institutions, with SBI at the forefront, have reclassified the steelmaker’s account as “standard” rather than categorising it as NAP.
Utilisation of Funds
For the first tranche, repayment of bank loans (principal component) stood at around ₹450 crore, while interest payments amounted to ₹85 crore.
Buyers’ credit repayment was to the tune of ₹300-400 crore, while working capital loan repayment to save interest costs was nearly ₹5,300 crore.
Around ₹700 crore was earmarked for other obligatory payouts, through fixed deposits and others.
Revival plans
The second tranche of funds, of around ₹1,400 crore, is expected in April 2025, while the third tranche of around ₹800 crore is in July. A final installment of ₹800 crore is anticipated in October.
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