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. |