Centre readies ₹400 crore lifeline for Salem Steel
The move signals a broader shift in the Centre’s approach to distressed public sector steel assets. The government is increasingly opting for state-led stimulus plans rather than pushing strategic units into the disinvestment bloc; ₹11,440 crore bailout was prepared for Rashtriya Ispat Nigam Ltd (RINL) earlier this year.
The renewed push for a revival through sales signals a shift towards restructuring and stabilizing key steel units rather than offloading them or simply preparing them for sale after a recovery. Concerns about job losses due to privatization remain a politically fraught issue in any disinvestment discussion.
The Salem plant, located in Salem district of Tamil Nadu, is currently operating at a capacity of less than 100,000 tonnes per annum, which is 25% below its installed capacity of 360,000 tonnes per annum, one of the two officials cited above said.
Another ministry official said the finalized turnaround plan aims to stabilize raw material flows (scrap), finance repairs and renovations, clean up the balance sheet and then increase utilization to 90-100%.
Installing an electric arc furnace to process the scrap is part of the plan. In the long run, the ministry plans to increase the capacity to 1 mtpa once the unit becomes self-sufficient, officials added.
The revival will depend on reorganizing Salem’s retail presence to focus on kitchen and homeware products sold under the SAIL brand. This includes expanding distribution through physical stores through new Memorandums of Understanding (MoUs) being worked on with states, promoting online sales through Amazon and the SAIL portal, and considering MoUs with Walmart and D-Mart., said the second official.
According to an internal memo of the steel ministry, two consultants – Metalist for operational efficiency and McKinsey for redesigning the business model and product mix – have been appointed. Mint.
Early corrections have already begun. According to the memo, a review by steel ministry leadership shows improvements to the cold rolling mill, better refractory life in the furnace, a switch from furnace oil to LNG (leading to a 12% cost reduction), an increase in renewable energy supply and a realignment of supplier regulations.
In parallel, SAIL executives are preparing a product roadmap targeting sectors such as rolling stock (rail wagons), bridge components, energy infrastructure and automatic graduated exhaust systems. “The direction given is to have a 10% market share in the cookware and household goods segments, preferably by 2030,” the second official said.
Emails and calls to the steel ministry and SAIL did not yield a response till press time.
Reversal from the center’s liquidation stance
According to SAIL’s latest annual report (FY25), Salem Steel Plant had been included in the government’s strategic disinvestment plan.
In October 2016, the Center accepted a proposal to sell three SAIL units – Visvesvaraya Iron and Steel Plant (VISP) in Karnataka, Salem Steel Plant and Alloy Steel Plant in West Bengal. There were no suitable or interested bidders for VISP and Salem, although expressions of interest were solicited for all three. Following the recommendations of a high-level committee and ministerial approval, the government canceled the tenders for VISP and Salem.
Salem’s divestment plan was officially canceled in January 2024 following an order from the finance ministry stating that the unit had failed to attract the right buyer interest despite expressions of interest and offers. Mint reviewed a copy of the order.
Lessons from the RINL playbook
While RINL is not officially off the Centre’s disinvestment radar, plans have slowed down after two key southern allies of the BJP, Chandrababu Naidu’s Telugu Desam Party and H D Deve Gowda’s Janata Dal (Secular) opposed the sale. The steel ministry, led by minister H D Kumaraswamy, has generated cash flow of approximately two tranches. ₹6,700 crore and ₹4,740 crore.
In January, the Cabinet Committee on Economic Affairs approved the total RINL revival plan. ₹11,440 crore. This helped RINL clear bank loan installments (mostly interest), partially pay creditors, secure raw materials such as iron ore and coal, and negotiate better interest rates with a consortium led by the State Bank of India.
“RINL is not officially off the disinvestment radar. But Salem is. And a turnaround plan is being worked on to ensure it emerges as one of India’s largest stainless steel producers,” the first official said.
Dhruv Goel, CEO of commodity market intelligence firm Big Mint, said: “The government, just like with RINL, appears to be moving away from outright privatization and towards reviving distressed PSUs. Revival is essential before any sale, as without operational improvement the asset cannot provide a fair valuation. In most cases, revitalization is a strategic step towards a future sale on better terms. But selling a plant is rarely easy due to public sentiment and local and political pressures.” considerations complicate the process.”
competitive environment
Jindal Stainless, backed by Ratan Jindal, is currently India’s largest stainless steel producer. Net profit announced ₹2,499.72 crore in FY25 and has an installed capacity of 3 million tonnes per annum. Salem, on the contrary, reported losses ₹383.09 crore as SAIL announces consolidated net profit ₹2,147.96 crore.
RINL, which is not traded on the stock exchange, does not yet disclose profit and turnover information other than its annual report.
According to an August 2025 report by consulting firm Grand View Research, the stainless steel cookware market in India is expected to reach an estimated revenue of $1,367.6 million by 2030, at a compound annual growth rate of 8.1% from 2025 to 2030.
