Bengal May Pick Up 6% In Fresh Iisco Revival Plan

The West Bengal government will consider picking up 6 per cent equity in the Indian Iron & Steel Company (Iisco) in a bid to revive the Burnpur-based subsidiary of Steel Authority of India Ltd (SAIL).

SAIL chairman Arvind Pande, who met West Bengal Chief Minister Jyoti Basu in New Delhi on Monday to apprise him of a fresh revival proposal submitted by Russian trading giant Tyazhpromexport (TPE), told Business Standard: He (Basu) responded very positively and said they (the West Bengal government) would consider participation in the venture by picking up a 6 per cent stake. TPE has presented a diluted funds injection plan to revive Iisco. The proposal envisages infusion of Rs 2,400 crore, against the Rs 4,000 crore planned earlier.

 

The SAIL management is examining the technical feasibility of the new plan. If we find it techno-economically viable, we intend to pursue it, Pande said. We have already written to the West Bengal government and are waiting for its reply. According to the chairman, SAIL officials have had detailed discussion with TPE in last two months.

According to the fresh plan, the Russian companys contribution in terms of equity and loan will amount to $400 million over five years, which would be financed out of the rupee rouble account. A crucial aspect is the agreement between the two governments on the rupee rouble account which is being thrashed out.

But anyway, now we have a package and I think in the next 15 to 20 days we will present it to the government. By that time the two governments are also expected to come to some agreement, then maybe something positive will emerge, Pande said.

The project cost has been reduced by making some changes in the original plan. In steel melting shop, instead of a large oxygen convertor planned earlier, the new proposal envisages installing a twin hearth furnace, a continuous caster and a small wire rod mill. SAILs Bhilai and Durgapur steel plants have some twin hearth furnaces.

This could be used as a stop gap method for the next 10 to 12 years. Later perhaps Iisco could go in for a new large convertor, Pande remarked.

We will retain at least 51 per cent, and if the West Bengal government contributes 6-7 per cent, TPEs stake could go up to 40 per cent. As far as the earlier proposal of employees contribution of 6 per cent of equity is concerned, it seems unlikely that they will be in a position to contribute, Pande pointed out.