MMTC stalls Neelachal, SAIL merger

Drags feet over sale of majority stake in the steel company.

The merger of steel maker Neelachal Ispat Nigam (NINL) with Steel Authority of India (SAIL) could be in trouble with MMTC, the majority stakeholder in NINL, unwilling to sell its stake.

"We are against the stake sale and we have informed this to the steel ministry," said a senior MMTC executive.

WHAT'S AT STAKE

Neelachal Ispat Nigam is jointly promoted by MMTC and the Industrial Promotion and Investment Corporation of Orissa (IPICOL)

MMTC owns 49.78 per cent stake in the steel company and the Orissa government, through IPICOL and Orissa Mining Corporation, owns 26.29 per cent

NINL is a company jointly promoted by MMTC and the Industrial Promotion and Investment Corporation of Orissa (IPICOL). MMTC owns 49.78 per cent stake in the steel company and the Orissa government, through IPICOL and Orissa Mining Corporation, owns 26.29 per cent.

NINL has a 1.1 million tonnes capacity integrated iron and steel plant at Kalinganagar in Orissa's Jajpur district.

The company has been allotted a captive iron ore mine by the Orissa government. The mine, located in Keonjhar, covers an area of 1,798 hectares and has reserves estimated at 100 million tonnes.

The reserves are expected to meet the requirements of a plant with capacity of a little more than two million tonnes.

About 1.6 million tonnes of iron ore would be required to produce one million tonnes of steel. The sourcing of ore and such material for steel plants is planned for a period of three decades.

The plant site has tremendous locational advantage, not just for its proximity to mines, but it also is conveniently placed with respect to the seaport, railway network and highway.

NINL had a turnover of Rs 1,252 crore in 2006-07.

The public sector SAIL, under the steel ministry, has the capacity to produce 15 million tonnes steel and plans to expand this to 23 million tonnes. The failure of the merger could impact SAIL's expansion plans.

An official with the steel ministry, however, said that the merger process was on and that both MMTC and the Orissa government were seeking higher valuations for their stake in NINL.

The government had constituted an expert group headed by former steel secretary B L Das to evaluate the feasibility of various proposals for merger of public sector enterprises under the steel ministry.

Accordingly, a decision was taken to initiate the merger of Bharat Refractories (BRL), NINL and Maharashtra Elektrosmelt (MEL) with SAIL, and Sponge Iron India (SIIL) with National Mineral Development Corporation (NMDC).

The merger of BRL, MEL with SAIL and SIIL with NMDC are in the final stages and awaiting Cabinet approval.