Bengal nod delay trips Kulti Works selloff

WINDS OF CHANGE BLOW ACROSS THE DOMESTIC STEEL INDUSTRY

The divestment of Kulti Works, a unit of Iisco Steel Plant, has hit a roadblock following a delay in clearance from the West Bengal government.

Tata Metaliks, Pawan Ruia, Bhushan Steel and Ruchi Steel had evinced interest in the unit. The expressions of interest had been submitted on April 26, but no progress had been made since then.

A SAIL spokesman said the company was awaiting permission from the West Bengal government for sub-leasing rights.

However, on whether the company would go ahead with the divestment once it obtained clearance from the state government, he said, "Even though SAIL had invited EOIs, there is no compulsion on its part to go ahead with it."

"We will take a call once the first step is through," said the spokesman. Iisco Steel Plant managing director, Nilotpal Roy said government clearance was one of the action areas. "First let us get the response," he added.

The company had written to the commerce and industries, land reforms and industrial reconstruction departments for clearance.

West Bengal commerce and industries minister, Nirupam Sen said, ideally the state government would like Iisco to continue with its ownership of the Kulti Works but if it was privatised then the buyer should not use the land for any other purpose.

Apart from the plant and machinery the Kulti bid also includes factory land of 218.5 acres. This is located 22km from Burnpur and about 100km from Kolkata.

Moreover, Iisco has its own expansion plans. SAIL had lined up a Rs 9,592 crore modernisation plan for Iisco, according to the steel major's corporate plan.

Roy said divestment of Kulti would not hamper Iisco's expansion plans. But sources said, Iisco did not have much land for expansion.

This was not the first time that bids were invited for Kulti Works. Shut since April 1, 2003, EOIs were invited in the middle of 2004 and three parties responded. However, the fate of the earlier bids is not known.

According to the terms of the latest bid, the buyer would not have any liabilities with respect to employees, ongoing legal cases, prospective legal claims or loans.

However, the buyer would have certain obligations for power supply to Burnpur Works and Ramnagore Colliery on a cost recovery basis.

The buyer would have also the obligation to maintain and operate the Monberia river water pumping station and pipeline into Kulti Town Settling Tank and supply alum treated water.

The bid does not include the adjacent township of Kulti spread over 548 acres with residential quarters, schools, hospitals, club and golf course. The total land was around 850 acres with 2,300 residential units.