Govt decides to merge Iisco with SAIL

BIFR, cabinet approval will have to be sought.

The central government has decided to merge Indian Iron and Steel Company (Iisco) with Steel Authority of India Ltd (SAIL), its parent.

Steel minister Ram Vilas Paswan said after a meeting with chief minister Buddhadeb Bhattacharya that investments would not be a deterrent as SAIL had registered profits in excess of Rs 2,500 crore this year.

"Whatever is required by Iisco will be given" said Paswan.

When contacted SAIL spokesperson said that an in-principle decision had been taken for merger of IISCO with SAIL. However, procedural requirement for approval of Board for Industrial and Financial Reconstruction (BIFR) and the cabinet would be followed.

"The revival package worked out with the approval of BIFR will be continued" said the spokesperson.

Government of West Bengal has also agreed to extend the benefit committed to Iisco as part of the revival package under the approval of BIFR.

"This will continue even after the merger" said the SAIL spokesperson.

The move was significant as chief minister Bhattacharya on a recent visit to Mumbai approached the Sajjan Jindal group to come up with a proposal for taking over Iisco.

Industry sources said, if Iisco was taken over by some other company, it would be a loss for SAIL as IISCO has rich iron ore mines with fabulous reserves.

Chiria alone has 2 billion tonne of iron ore with 62 per cent iron content. The mines at Sukri have 64-65 per cent iron content.

Many foreign companies had evinced interest in IISCO's mines in the past. But, they were interested only in the mines and not the plant.

Sources also pointed out that SAIL was now in a position to develop and modernise IISCO's mines with its current financial performance.

Moreover, Iisco had also improved its financial position. The company registered a net profit of Rs 27.09 crore on a turnover of Rs 1,051.26 crore last year. As on August 1, 2004, IISCO's employee strength was 15,753.

Iisco, it maybe recalled, was declared sick in 1994. In June 2002, IDBI was appointed as operating agency and the institution submitted the revival plan in 2003.

According to financial agreement signed between SAIL and government in 1999, Iisco was to be converted into a joint venture with SAIL as the minority partner.

However, after due diligence by BHP-Mitsui combine and Tyazpromexport of Russia, the companies backed out as they were not interested in the plant.