MMTC will infuse Rs 150 core capital in Neelachal Ispat Nigam Ltd

MMTC Ltd will invest Rs 150 crore for the stabilisation of the steel making unit of Neelachal Ispat Nigam Ltd (NINL), promoted by the commodity giant.
 

The SBI cap has estimated Rs 300 crore capital infusion for taking up the pending proposals to enable the plant produce finished steel.

"The total capital infusion by the shareholders is pegged at Rs 300 crore. MMTC with 50% stake will invest Rs 150 crore in equity. The proposal has been processed by the ministry. We are hopeful that the cabinet will give its nod in two months", MMTC chairman-cum-managing director Ved Prakash told media persons.

MMTC is largest shareholder in the steel PSU with equity of 49.9%. Another navratna PSU National Mineral Development Corporation (NMDC) and two Odisha government PSUs — Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) are the other partners in the project.

"The amount will be used for taking up the pending projects including capital repair of the blast furnace to stabilise the plant. After stabilisation we will go for further expansion", he added.

NINL is currently the largest pig iron exporter in the country. It had suspended steel production due to adverse market conditions. The company is now planning to start steel production from July, 2017 after the repair of the blast furnace which will be taken up in April and May. The plant aims to run at rated 1.1 million tonne capacity from July, up from present capacity utilisation of 60-70%.

In a boost to steel company, which is running on loss now, NINL has signed a mining lease agreement with Odisha government this month for iron ore extraction area of 874.29 hectares.

The mining capacity is two million tonne of ore per annum which the company feels is sufficient for 1.1 million tonne plant.

After getting the Stage-I and Stage-II forest clearance, the mining operations is expected to start by first quarter of the next year. With the operation of captive mine, NINL will save around Rs 200 crore per year. Mining will be done through mine development cum operator (MDO) that will bring the equipments and build the capacity, Prakash said.

The NINL board has decided to go for further expansion after the operation of the mines and 100% utilization of the capacity.

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. MMTC rejected any proposal of divesting its stake in the plant.

" We will be EBITDA positive by 2017-18 and net profit earning from 2018-19", Prakash added.