Debt-laden RINL looks at more land sale to secure working capital, reduce borrowings

Debt-ridden PSU steel-maker, RINL, is hopeful of raising around ₹500-800 crore from sale of 14-odd acres of non-core, non-contiguous land parcels at Visakhapatnam. The funds will be used primarily be towards debt-reduction and working capital requirements, government sources aware of the development told businessline. 

The first phase of e-auction commenced with the auctioning of a land parcel of around 6 acres (29,270 yards) have secured a price of close to ₹243 crore; and the phase-II of the auction is “expected to happen soon”. 

In all 111 plots and 19 blocks have been put up for sale. More land parcels are being looked at, sources said. Plots are located at well-developed colonies or in the central business district in Visakhapatnam and are mostly encumbrance-free with a clear title vested. “The reserve price for land sale is pegged at ₹480 crore; and this could go up to around ₹500-800 crore if demand is good,” an official said adding that phase-I auctions saw “enthusiastic bidding” and substantial “interest” from 220 bidders. According to officials of RINL, some 63 land parcels and 9 blocks, were put up for auction in phase - 1. “The e-auction witnessed a good response from bidders including NRIs for properties located at HB Colony, Auto Nagar and Pedagantyada in Visakhapatnam,” the official said. 

Most land parcels were around one acre in size and reserve price varied between ₹70,200 and to ₹85,800 per sq yard. 

Debt Concerns 

The privatisation-bound steel-maker has been struggling with rising debt. Its last Annual Report states the company  saw the net debt spiral to over ₹20,400 crore in FY23, up 20 per cent y-o-y; with the debt-equity ratio going up ten-fold to 52.29. 

Independent auditors have raised concerns about the company’s ability to continue as a “going concern”, and indicated that the entity “is facing cash-flow problems”. Annual debt servicing requirement is close to ₹3,000 - 4,000 crore. But stood at just ₹83 crore in FY23. 

A senior Steel Ministry official said, no direct support (or loans) have been given to the steel-maker from the Ministry. But the Ministry was working with RINL to ensure its smooth operations.

In December last year, RINL entered into partnership with Jindal Steel and Power Ltd (JSPL) to ensure supply of liquid steel at the latter’s hot strip mill in Angul (Odisha). Previously, RINL said JSPL will provide working capital support or raw material supply of ₹800-900 crore under a pact signed between the companies. In return, the CPSE will ensure the supply of 90,000 tonnes of cast blooms to the private steel company.

Post the MoU, the third blast furnace was restarted in December-end. For the nine-month period (April–Dec) of this fiscal, the steel-maker reported ₹16,776 crore worth of sales, up 21 per cent in volumes. The forged wheel unit and other core land parcels are also on the block.

Phase-1 land auction 

In a post on micro-blogging platform X (formerly Twitter), the Department of Public Enterprises, said: “Phase 1 e-auction of RINL properties in Visakhapatnam by NLMC received an overwhelming response from bidders. …Phase 2 to follow soon!” 

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