The Centre has refused to give consent to Rashtriya Ispat Nigam Limited (RINL)’s proposed merger with NMDC, according to Pramod Kumar Rastogi, secretary, Union steel ministry.
RINL had mooted the merger proposal with NMDC, the country’s largest iron ore producer and one among the top 10 listed companies in terms of market capitalisation, a few years ago, claiming it would be a win-win situation for both the companies owned by the steel ministry. RINL, an unlisted entity, owns the Visakhapatnam Steel Plant.
“RINL has been pushing for a merger with NMDC for long. However, after evaluating the pros and cons, the Prime Minister’s Office has rejected the proposal and the merger is unlikely to happen,” Rastogi said, declining to divulge further details.
The Andhra Pradesh chief minister had already expressed apprehensions about RINL’s merger proposal with the Navaratna public sector enterprise and had even opposed it in the presence of Prime Minister Manmohan Singh during the inauguration of RINL’s expansion work at Visakhapatnam last year.
The main disadvantage is that RINL has no captive mines, which is leading to high cost of production and low supplies. Its iron ore requirements are being met by NMDC fully through long-term contracts.