The state government has decided to explore various options to turn Neelachal Ispat Nigam Limited (NINL), a joint venture of MMTC and the Orissa government, as a professional steel making company.
It has also agreed to contribute Rs 95 crore as proportionate equity for the second phase work of the company in which it holds 26 percent stake through Industrial Promotion and Investment Corporation of Orissa Ltd. (Ipicol) and Orissa Mining Corporation (OMC). Though MMTC is the majority share holder in the company, the state-owned trading firm does not have any core competency in steel making. In this backdrop, the state government has decided to write to the Union ministry of commerce (under which MMTC operates) to take a view on the future of NINL.
Similarly, the option of handing over NINL to Rastriya Ispat Nigam Ltd (RINL), the public sector steel unit, is also being explored to facilitate its transition from a pig iron maker to steel producer. For this, the government would write to the Union ministry of steel, under which RINL functions, to take a view on NINL. This was decided in a high level review meeting on expansion plans of NINL chaired by the chief minister Naveen Patnaik yesterday.
Sources said, the board of directors of the company has approved a concept paper envisaging expansion of capacity of the unit from 1.1 million tonne (to be achieved after the first phase expansion) to 3 million tonne and ultimately to 5 million tonne per annum (MTPA). The company needs immediate need for funds to finance the current phase of expansion estimated to cost about Rs 1,800 crore including Rs 300 crore for development of mines. It consists of setting up steel melting shop, billet caster, bar and wire rod mill among others. While the company has spent Rs 380 crore from internal accruals, Rs 742 crore more is needed to be raised.
Out of Rs 360 crore additional equity infusion proposed in the company, Ipicol and OMC together need to contribute proportionate amount of Rs 95 crore.
With Ipicol not in a position to make the payments, the government is contemplating to transfer Ipicol shares (22 per cent) to OMC, sources added.
