Public sector engineering consultants Mecon Ltd has advised Steel Authority of India (SAIL) against acquiring the entire assets of the Amethi-based Malvika Steel.
Sources said Mecon had found only the iron-making facility of Malvika Steel a viable purchase. This is the second time that the steel behemoth has referred Malvika to Mecon. The consultants has returned with the same recommendation on both occasions.
SAIL had initially approached Mecon to evaluate the viability of buying the iron-making facility at the plant. After they submitted the report, the lead financial institution involved - Industrial Finance Corporation of India - put its foot down, saying it was not interested in partial sales.
The public sector steel manufacturer then went back to Mecon to evaluate the project as a whole and prepare a feasibility report on the existing assets at Jagdishpur (in Amethi) and determine whether there was a need for pumping in additional funds to make it operational as a fully integrated steel plant.
Promoted by the Usha Group, Malvika was taken over by financial institutions from the Rais and the company still owes almost Rs 1,300 crore to financial institutions.
The Rs 3,000 crore project was left unfinished in 1998, within just 10 months of getting off the ground. Malvika Steel’s plant was initially planned to have a capacity of 8 lakh tonne of sponge iron and 1.2 million tonne of iron pellets, but it was converted into a 6.35-lakh-tonne integrated steel plant for manufacture of long products that are used extensively in the infrastructure and construction business.
SAIL was supposed to take a final call on the purchase of assets of Malvika’s plant after receiving the feasibility report from Mecon.
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