Kolkata: Lenders to the Rashtriya Ispat Nigam Ltd (RINL) have formed a consortium to prepare a uniform debt resolution plan for the government-owned Navratna company that has been under financial stress due to working at one third of its capacity.

RINL is the corporate entity of Vizag Steel.

State Bank of India (SBI), which is its largest lender with about Rs 6,400 crore of fund exposure, has led the formation of the consortium, a person familiar with the matter said.

It is learnt that SBI extended more than Rs 5,000 crore in term loan, Rs 1,400 crore as working capital loan and Rs 4,000 crore as non-fund-based limit to the steel maker.

SBI Capital Markets has also been hired to prepare the resolution plan.

"Banks had lent individually to Vizag Steel Plant, making it difficult for them to work on the restructuring package. A consortium of lenders was the need of the hour to ensure uniformity in the resolution plan," a top executive with a public sector bank said.

SBI did not respond to email sent by ET till the press time.

Vizag Steel Plant has about Rs 14,000 crore as long-term bank loans and Rs 15,000 crore as fund and non-fund-based limit in short term loans, guarantees and letter of credit. Earlier in July, it missed payments to lenders, following which rating companies downgraded it to default category.

Last week, India Ratings and Research affirmed RINL's bank facilities’ ratings at default category citing "sustained delays in the servicing of principal and interest repayments from July 2024". It quickly withdrew the rating after receiving a no-objection from all lenders.

However, the central government has over the last two months reportedly infused Rs 1,650 crore in the company, which is in talks with lenders for a restructuring package to raise working capital and improve capacity utilisation.

Established in 1982, the company is the first shore-based integrated steel plant located at Visakhapatnam. It has an installed liquid steel capacity of 6.3 million ton per annum. It produces a broad range of steel products including plain wire rods, rounds, squares, structural, billets, blooms and pig iron.