Centre plans ₹400 crore infusion to revive SAIL’s Salem Steel Plant

The move signals a broader shift in the Centre's approach to distressed public-sector steel assets. Instead of pushing strategic units to the disinvestment block, the government is increasingly opting for state-led revival plans, an approach already visible in the ₹11,440 crore rescue crafted for Rashtriya Ispat Nigam Ltd (RINL) earlier this year.

The renewed push for revival over sale signals a shift toward restructuring and stabilizing key steel units instead of offloading them—or preparing them for a sale only after a turnaround. Job-loss concerns tied to privatization continue to be a politically fraught issue in any disinvestment debate.

The Salem plant, located in Tamil Nadu’s Salem district, is currently running at 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.

The turnaround blueprint being finalized aims to stabilize raw material flows (scrap), fund repairs and renewals, clean up the balance sheet, and then ramp up utilization to 90-100%, the other ministry official said.

Setting up an electric arc furnace for processing scrap is part of the plan. Over the longer term, the ministry intends to scale capacity to 1 mtpa once the unit becomes self-sustaining, the officials added.

The revival will hinge on reworking Salem’s retail presence, focusing on kitchen and homeware products sold under the SAIL brand. This includes expanding distribution through brick-and-mortar stores via new Memoranda of Understanding (MoUs) being worked out with states, pushing online sales through Amazon and the SAIL portal, and considering MoUs with Walmart and D-Mart, the second official said.

Two consultants—Metalist for operational efficiencies and McKinsey for redesigning the business model and product mix—have been brought on board, according to an internal note of the steel ministry, reviewed by Mint.

Early fixes have already begun. A review by the steel ministry leadership, as per the note, shows improvements at the cold rolling mill, better refractor life in the furnace, a shift from furnace oil to LNG (leading to a 12% cost reduction), increased renewable power procurement, and recast supplier arrangements.

SAIL executives, in parallel, are drawing up a product roadmap targeting sectors such as rolling stock (rail wagons), bridge components, energy infrastructure, and auto-grade exhaust systems. “The direction given is to have 10% market share in cookware and homeware segments, preferably by 2030," said the second official.

Emails and calls made to the steel ministry and SAIL did not elicit a response by press time.

A reversal from the Centre’s divestment 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 Centre cleared a proposal to sell three SAIL units—Visvesvaraya Iron & Steel Plant (VISP) in Karnataka, Salem Steel Plant, and Alloy Steels Plant in West Bengal. Although expressions of interest were invited for all three, there were no suitable or interested bidders for VISP and Salem. Following recommendations from a high-level committee and ministerial approval, the government cancelled bids for VISP and Salem.

Salem’s divestment plan was formally annulled in January 2024 after an order from the finance ministry, which said that the unit had failed to attract the right buyer interest despite expressions of interest and submission of bids. Mint has 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 after two key southern allies of the BJP—Chandrababu Naidu’s Telugu Desam Party and HD Deve Gowda’s Janata Dal (Secular)—opposed a sale. The steel ministry, led by minister HD Kumaraswamy, worked out a two-tranche cash infusion of approximately ₹6,700 crore and ₹4,740 crore.

In January, the Cabinet Committee on Economic Affairs approved the revival plan for RINL for a total of ₹11,440 crore. This helped RINL clear bank loan instalments (mostly interest), pay creditors in part, 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 out to ensure that it emerges as one of the largest stainless steel makers in India," the first official said.

Dhruv Goel, chief executive officer of commodities market intelligence firm Big Mint, said, “The government seems to be moving away from outright privatization and towards reviving distressed PSUs, much like the approach taken with RINL. A revival is essential before any sale because without operational improvement, the asset won’t command a fair valuation. In many cases, revival is a strategic step towards a future sale at better terms. But selling a plant is rarely straightforward due to public sentiment, local pressures and political considerations (that) make the process complicated."

Competitive landscape

Jindal Stainless, promoted by Ratan Jindal, is currently India’s largest stainless steel maker. It posted a net profit of ₹2,499.72 crore in FY25 and has an installed capacity of 3 million tonnes per annum. Salem, in contrast, reported a loss of ₹383.09 crore, even as SAIL posted a consolidated net profit of ₹2,147.96 crore.

RINL, being unlisted, does not disclose profit and turnover information other than through its annual report, which is yet to be prepared.

The stainless-steel cookware market in India is expected to reach projected revenue of $1,367.6 million by 2030, with a compound annual growth rate of 8.1% from 2025 to 2030, according to an August 2025 report by consultancy firm Grand View Research.