OMC to float subsidiary for coal mining

The state owned Orissa Mining Corporation (OMC) would soon float a subsidiary to foray into coal mining business.

The board of directors of OMC has approved a proposal to this effect recently.

With large scale industrialization taking place in the state, there is growing demand for coal from steel, aluminium and power industries. The state owned PSU intends to cash in on this opportunity.

The Independent Power Producers (IPPs) along with the captive power plants (CPPs) would require assured supply of coal to meet their requirement. Besides, the top management of OMC feels that Mahanadi Coalfields Ltd (MCL), which supplies coal to the industries in the state, wouldn’t be able to meet the growing demand for coal. In this context, OMC wants to tap the business opportunities available in this sector.

Meanwhile, Ernst &Young, the consultant appointed to undertake feasibility study and suggest structuring of OMC-Videsh, another subsidiary mooted by OMC to take up mineral business overseas, is expected to submit its report by March this year.

With a view to take advantage of the globalisation process and ensure supply of various raw materials required by upcoming industries in the state, OMC plans to expand its operation overseas.

OMC has conceptualized OMC-Videsh Nigam Limited (OVNL) in line with ONGC Videsh.

“The consultant is likely to submit its report by March this year and we would seek the approval of the government for overseas foray after the report is obtained”, Ashok Dalwai, secretary, steel and mines and who is also the chairman of OMC, told Business Standard.

OMC, aiming to be to be among the top public sector mining companies of the country, has prepared a ‘perspective plan’ focussing on basic reforms, increased production and productivity, expansion of exploration activities, manpower restructuring and improved financial management among others.

Though the economic slowdown during 2008-09 affected the industrial sector everywhere, OMC was able to prove its resilience with the highest turnover of Rs 2085 crore during the year. It is targeting a turnover of Rs 2400 crore for 2009-10.

On the profit front also the company has posted a profit before tax (PBT) of Rs 1890.22 crore in 2008-09, up from Rs 528.04 crore in the previous year.