SAIL close to buying out Malavika Steel

The state-owned Steel Authority of India is understood to be acquiring Malvika Steel, bids for which were submitted today and are scheduled to be opened on Friday.

SAIL officials confirmed that the company had put in a bid for Malvika Steel, saying the company could get a ready-made plant through the acquisition.

On whether it was feasible to run a plant so far away from iron ore and coal mines, the officials said there was a fairly good market for steel products around the plant.

The official added that the Malvika bid was a part of the company's strategy to acquire other steel assets in the country. It is also eyeing the National Iron & Steel Company in West Bengal.

The Debt Recovery Tribunal is auctioning the entire plant, located on 740 acres of land in Jagdishpur, located in Amethi in Uttar Pradesh, in order to recover outstanding loans.

Congress President Sonia Gandhi represents the Amethi constituency in Parliament.

The reserve price is Rs 194 crore. The entire dues realised from the property are payable to IFCI. "There are not too many bidders for the plant. SAIL is the front-runner to acquire it," said a source.

The Rs 3,000 crore steel project was left half unfinished in 1998, within 10 months of getting off the ground. Malvika Steel owes nearly Rs 1,366 crore to IFCI. The company was promoted by Vinay Rai.

Indo Gulf fertilizer plant and BHEL's insulator manufacturing division are also located adjacent to the steel plant.

Over the last one year, IFCI has recovered around Rs 1,000 crore from the sale of various non-performing assets, which as of March 2006 stood at around Rs 4,500 crore.