MMTC to infuse Rs 500 cr equity in NINL

State-owned trading firm MMTC Ltd would pump in around Rs 500 crore as equity contribution for first phase capacity expansion of Neelachal Ispat Nigam Ltd’s (NINL) steel plant at Kalinganagar. Phase-I expansion would ramp up steel output from 1.1 million tonne per annum (mtpa) to 2.2 mtpa and this is expected by 2020.

“As per the rough estimates of Mecon, the fund for NINL’s first phase expansion has been worked out at Rs 5,600 crore. Out of this, the promoters’ contribution comes to nearly Rs 1,000 crore. MMTC’s share would be in the range of Rs 400-500 crore and the rest equity would come from other promoters,” said Ved Prakash, chairman, NINL and chairman cum managing director, MMTC Ltd.

Apart from MMTC (that has controlling stake of 49.9 per cent), two state government entities — Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) have significant stakes in NINL. Central PSUs like National Mineral Development Corporation (NMDC), Bhel Ltd and Mecon have minor equity participation. Prakash said, Mecon was in the process of preparing the techno-economic feasibility report (TEFR) for steel project’s expansion. The report is slated to be ready in six months.

“Once the report is in place, we will contribute our equity infusion and go for financial closure,” he added.

NINL has chalked out a plan to achieve steel output of five mtpa in two phases. Full capacity expansion estimated to cost Rs 25,000-30,000 crore, is slated to be achieved by 2025. Already, Rs 3,600 crore has been invested on the company’s existing plant at Kalinganagar. Investment banker SBI Caps has projected that NINL would turn profitable in 2016-17 with stabilisation of its steel melting shop (SMS) and commissioning of its captive iron ore mines at Koida. This would make the NINL plant self sustainable and also help generate adequate internal resources for contributing to its expansion in the offing. The steel PSU hopes to save at least Rs 250 crore every year on commencement of operations at its captive mine with an estimated deposit of 110 million tonne.

“We hope to get all clearances for our captive mines soon and start mining within a year. We have asked the Odisha government officials to support us in expediting the clearances for our captive mine. Today, NINL is buying 100 per cent of its iron ore from outside sources. Captive production will turn things around for us and make NINL profitable,” said Prakash. He called on chief minister Naveen Patnaik and chief secretary G C Pati to apprise them on progress of expansion plan.

“MMTC has been providing financial and marketing support for the smooth functioning of NINL. We have provided corporate guarantee of Rs 1470 crore to enable NINL avail loans from banks and financial institutions”, he added.

Prakash scotched speculation of possible takeover of NINL by larger PSU rival Steel Authority of India Ltd (SAIL).