MMTC gets Rs 724 cr commission from NINL since 2001-02

Public sector steel maker Neelachal Ispat Nigam Ltd (NINL) has paid commission worth Rs 724.96 crore to trading firm MMTC Ltd between 2001-02 and 2015-16. The payment was made in respect of procurement of raw material for NINL's steel plant located at Duburi in Odisha's Jajpur district and also for sale of finished goods.

MMTC is the biggest shareholder in NINL with an equity 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.

There is a mutual arrangement between MMTC and other promoters of NINL for payment of commission to the former.

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 presently. NINL runs a steel plant at Kalinganagar in Odisha's Jajpur district.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.