MMTC to take call on equity infusion in NINL after Mecon report

Mecon is examining the feasibility of expanding NINL's steel making capacity to 5 mn tonnes from 1.1 mn tonnes currently

MMTC Ltd, the biggest stakeholder in steel PSU Neelachal Ispat Nigam Ltd (NINL) would take a call on equity infusion in the steel unit after Mecon submits its report.

Mecon has been engaged as the consultant to examine the feasibility of expansion of NINL's steel making capacity to five million tonne per annum (mtpa), up from 1.1 mtpa currently. NINL runs a steel plant at Kalinganagar in Odisha's Jajpur district.

"The steel market is passing through a very volatile phase. We cannot rush to take investment decisions. We can take a decision only after Mecon submits its report. The report is expected in two months", Ved Prakash, chairman-cum-managing director, MMTC and also chairman, NINL.

Mecon is preparing the techno-economic feasibility report (TEFR) for NINL expansion.

As per the rough estimates of Mecon, the fund for NINL's first phase expansion has been worked out at Rs 5600 crore. Out of this, the promoters' contribution comes to nearly Rs 1000 crore. MMTC's share would be in the range of Rs 400-500 crore and the rest equity would come from other promoters.

Apart from MMTC (that has a controlling stake of 49.9 per cent), two state government entities -- Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) own stakes in NINL. Central PSUs like National Mineral Development Corporation (NMDC), Bhel Ltd and Mecon have minor equity participation.

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 3600 crore has been invested on the NINL steel 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. The captive mine has 110 million tonne of iron ore deposits and promises to save Rs 250 crore every year for NINL.

-----EOM-----