Lack of equity infusion by promoting companies of Neelachal Ispat Nigam Ltd (NINL) has posed a roadblock to the steel PSU's expansion plan.
NINL, known as the biggest pig iron exporter, has installed hot metal capacity of 1.1 million tonne per annum (mtpa) at its plant at Duburi in the Kalinga Nagar Industrial Complex in Jajpur district. Around Rs 4,000 crore has already been invested on commissioning different facilities at the site including steel melting shop (SMS), gas based power plant, sinter and coke oven plant. However, delay in equity infusion to the tune of Rs 300 crore by the promoters- MMTC Ltd, National Mineral Development Corporation (NMDC) and Odisha Mining Corporation (OMC) has hindered the steel plant's further progress, said a company source.
Investment banker SBI Capital Markets has indicated a fund requirement of Rs 800 crore for NINL. Of this, Rs 500 crore is to be raised via debt with the balance Rs 300 crore to come from the promoter firms. The projected amount was meant to fund ongoing projects, mine development expenses and net working capital.
"Out of the promoters' equity contribution of Rs 300 crore, MMTC is supposed to contribute Rs 150 crore, NMDC has to chip in Rs 38 crore while the rest Rs 112 crore has to come from OMC. From the promoters' equity contribution, Rs 100 crore would be used to develop the captive iron ore lease of NINL and Rs 200 crore would be devoted to project expenses. Due to delay in equity contribution by the promoter firms, we are unable to raise debt. Out of the total debt requirement of Rs 500 crore, we have been able to avail loan of Rs 280 crore so far," he added.
NINL has written to state chief secretary G C Pati, pressing for expediting infusion of equity by the promoters.
NINL's steel plant has generated employment for 3,000 employees which includes 1500 direct jobs and indirect employment for 1,500 others.
The steel maker has lined up Rs 40,000 crore investment plan to ramp up steel output to six mtpa from the existing 1.1 mtpa. The capacity expansion is expected to happen in five years. Of this, Rs 4,000 crore has already been invested.
In the first phase, the capacity will be raised to 2.5 million tonne and the steel firm expects to achieve this in three years. Recently, NINL was among the 17 units to have got commitment on iron ore supplies from OMC for the January-March quarter of this fiscal. Presently, NINL's product portfolio includes pig iron and LAM (low ash metallurgical) coke along with nut coke, coke breeze, crude tar, ammonium sulphate and granulated slag. The envisaged products in the future in Phase-II are billets, bars and wire rods of different grades and sizes. NINL has its own captive power plant to meet the internal power requirement.
