Idcol may merge 2 subsidiaries

Two subsidiary companies under the administrative control of the state owned Industrial Development Corporation of Orissa Limited (Idcol) may be merged with the parent company.

These units are Idcol Kalinga Iron Works (KIWL) located at Barbil and Idcol Ferro Chrome and Alloys Limited (IFCAL) located at Jajpur Road.

A proposal in this regard has been sent by IDCOL to the public enterprise (PE) department of the Orissa government. The latter has forwarded it to the Public and Co-operative Enterprises Restructuring Committee (PCERC) headed by the chief secretary. The proposal may be taken up in the next PCERC meeting, official sources said.

The move is mooted to maximize benefit out of the prevailing market conditions where there is boom in the steel and ferrochrome sectors.

If the proposed merger comes through, it is likely to increase the valuation of these two companies along with the valuation of the parent company. The merger proposal will be sent to the Cabinet Committee on Disinvestment (CCD) chaired by the chief minister, Naveen Patnaik, once it is approved by the PCERC.

“It is pre-mature to talk about the proposed merger. This can happen only after all the accumulated losses of these companies are cleared by the end of December 2008”, Ashok Kumar Meena, managing director, Idcol, told Business Standard.

The performance of these units have been better in recent years with IFCAL clocking a turnover of about Rs 145 crore (provisional) and profit of about Rs 50 crore during 2007-08. Similarly, Kalinga Iron Works also achieved a turnover of Rs 240 crore with a profit of about Rs 10 crore in the last fiscal.

Idcol has engaged project consultant, Mecon to prepare and submit a perspective plan for the expansion of the Kalinga Iron Works and IDCOL Ferro Chrome and Alloys Limited. It will take a final decision regarding the future expansion of these units only after the submission of the perspective plan by the consultant.

The expansion plan includes a 1 lakh tonne per annum stainless steel production facility at IFCAL and a medium size blast furnace of 300-350 cubic meter, a ductile sponge pipe plant and a steel melting shop at KIWL.