RINL eyes Neelachal Ispat

May acquire shares of MMTC and Mecon.

After the unsuccessful bid of Steel Authority of India (SAIL) to acquire Neelachal Ispat Nigam (NINL), a joint sector company promoted by MMTC and the Orissa government, another central PSU, Rashtriya Ispat Nigam Ltd (RINL), has intensified its efforts to join the Orissa-based steel unit as a strategic partner.

With the state government unwilling to divest its shares, RINL has sought to acquire the majority stake in NINL by buying out the shares of MMTC and Mecon. The principal promoter, MMTC, owns 49.8 per cent of the shares and Mecon has a small stake of 1.5 per cent. The Orissa government, through Industrial Promotion and Investment Corporation (IPICOL) and Orissa Mining Corporation (OMC), holds a 26 per cent stake in the company.

SAIL had initially evinced interest to take over NINL and accordingly IDBI was given the job of evaluating the share price. But both MMTC and the Orissa government showed their unwillingness to sell their stake at IDBI’s recommended price of Rs 27 per share. Following objections of the promoters, Industrial Finance Corporation of India (IFCI) and KPMG had been given the job of revaluation of the share price.

Sources said with the SAIL bid now pushed to the cold storage, the present mandarins in the steel ministry are keen on RINL joining NINL as a strategic partner, as it would give the Vizag-based company, operating without any captive iron ore mines, access to the raw material source. NINL has a captive mine at Koida with 110 million tonnes of iron ore reserve.

IFCI and KPMG have given their preliminary reports on the revaluation of NNL shares.. IFCI has valued the shares at Rs 56 each (without the right to sell iron ore from its captive mine to outside users) and Rs 66 (with this right). KPMG’s comparative valuations are Rs 80 and Rs 90.

Sources said the company authorities have suggested some changes in the process of share evaluation. After these, the consultants are expected to give the final report shortly. This may push up the share value further, said a senior official of the company, adding, “in any case, the share value would have been much higher, had it not been evaluated in a recessionary business environment”.

Keen to keep the cost of acquisition low, the chairman and managing director of RINL, P.K. Bisnoi, hoped the pricing of the shares would be reasonable, as it is a government to government sale. “It is up to the (Union) ministry of steel and commerce to decide the final share price, though we want to keep it reasonable,” Bisnoi, who made a recce of the NINL plant at Kalinganagar in Jajpur district yesterday, told Business Standard.