Rescue package on the cards for MTNL, RINL; committee to take final call on servicing MTNL debt of nearly Rs 8,000 cr

The government is considering bailout plans for public sector enterprises Mahanagar Telephone Nigam (MTNL) and Rashtriya Ispat Nigam (RINL), with the steel and telecom ministries discussing the support package with the finance ministry, said people familiar with the development.

A committee of secretaries from the departments of expenditure, investment and public asset management, and telecommunications will take a final call on MTNL’s bank debt, they said. “The government will make the payment for bonds issued by MTNL,” an official told ET. “The decision for over Rs 7,925-crore bank debt will soon be taken by the committee of secretaries.”

Both MTNL and RINL are in default and in discussions with lenders on loan restructuring. ET earlier reported that lenders rejected a 40% repayment proposed by MTNL on grounds that a 60% haircut was too steep, especially from an entity that should have sovereign-like creditworthiness.


RINL, corporate entity of Vizag Steel Plant, has defaulted on servicing of term loans of Rs 410.5 crore up to June. The firm incurred a loss of Rs 2,859 crore in FY23 and has net debt of Rs 20,400 crore.

“We have received a representation from the steel ministry on RINL, and it is being examined," said another official, adding that there is a view within the government that it will not be prudent to let public sector banks (PSBs) take a substantial haircut on their loans or pick up equity stakes in these firms in lieu of repayments.

A bank executive said there isn’t much value in stakes in these loss-making companies. “Unless there is clarity on their disinvestment, it may not be feasible," he said.

In July, India Ratings and Research downgraded RINL’s bank facilities' ratings to IND-D from IND-BB+. “RINL’s liquidity is poor because of low-to-negative ebitda (earnings before interest, taxes, depreciation and amortisation) generation against its significantly high debt repayment obligations,” it noted.

Another official said that there is an understanding among all stakeholders—including the administrative ministries, the finance ministry and the banks—that these firms have to be maintained as “going concerns.”

“In the case of RINL, some initial estimates were that a package of around Rs 10,000 crore, including a working capital grant of around Rs 3,000 crore, will help the firm turn around,” the official said, specifying that these were initial projections.

RINL is also looking to raise money through monetisation of its non-core assets. Earlier this year, minister for steel and heavy industries HD Kumaraswamy had visited the plant in Vizag and assured all possible assistance.

A provision will have to be made in the budget for any payments, said the official cited above.

MTNL’s creditors include state-run banks, including Bank of India, Union Bank of India and State Bank of India.

While bonds issued by MTNL come with a sovereign guarantee, the bank debt isn’t supported by such a pledge. The company’s outstanding debt stemming from bonds and securities stood at Rs 27,739.96 crore at the end of March.

The government has been making the interest payments on the bonds issued by MTNL.