Neelachal Ispat Nigam Ltd (NINL) which is in the dumps following its lead promoter MMTC's decision to exit the public sector steel unit, has elicited support from a confederation of steel executives.
Kolkata-based Steel Executives Federation of India (SEFI) has written to Prime Minister Narendra Modi, demanding the merger of loss accumulating NINL with the bigger PSU steel maker Steel Authority of India Ltd (SAIL).
With MMTC already going public on its intent to sell stake in NINL and two other key promoters- the state government controlled Odisha Mining Corporation (OMC) and Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol) no longer keen to retain their stakes, revival of proposal to merge NINL with SAIL can inject a dose to hope to the ailing NINL. MMTC is the biggest equity partner with a share of 49.9 per cent. Between them OMC and Ipicol own 26 per cent stake. Other central public sector enterprises like NMDC, BHEL Ltd and Mecon are minor equity participants in NINL.
Though NINL officials are tight-lipped, market sources claim NINL's blast furnace at Duburi (Odisha) is already under shutdown for over two weeks now. With MMTC clogging cash flows, NINL was forced to bite the bullet by going for temporary closure of the blast furnace whose capital repair it successfully completed in May 2018.
SEFI's general secretary Bimal Kumar Bisi claimed that the proposed merger will be a hassle-free process since it involved transfer of shares by MMTC and other PSUs to SAIL. In his letter to the Prime Minister, Bisi pointed out how SAIL, in the past, had made several abortive attempts to take over NINL and it is prudent to revive the proposal now since MMTC, the main promoter has decided to quit the steel venture.
Detailing NINL's strengths Bisi said, the steel plant possesses 2500 acres of unencumbered land suffice to expand capacity to five million tonne, a state-of-the-art coke oven battery with dry quenching facility, an already commissioned Steel Melting Shop (SMS), proximity to the major port at Paradeep and to top it all an iron ore mine boasting of 110 million tonne deposits and with a lease validity spanning 50 years.
According to the contents of the letter, Mecon has revalued the assets of NINL at approximately Rs 8300 crore on conservative estimates. NINL's liabilities are below Rs 5000 crore.