PMO backs SAIL-RINL merger

The proposed merger of public sector steelmakers Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL), which was put in the freezer owing to opposition from the Andhra Pradesh government, is expected to gather steam again, with the Prime Minister's Office (PMO) asking for a political consensus on the issue.

Government sources revealed that given the sound business sense of a merger between the largest steelmaker in the country, SAIL and the Vishakhapatnam-based RINL, the PMO had asked the steel ministry to take the up the issue and work out a broad political consensus for the move.

"There is no business logic for the merger not to go ahead except for sentiments of politicians from Andhra Pradesh, which stalled the process the last time.

The PMO has asked the ministry to work on the issue from scratch and seek a broad consensus across political lines," a government source said.

The Centre had originally planned a merger scheme involving a host of smaller public sector units involved in the metals industry with SAIL to make it a behemoth, but faced strong opposition from the political parties from Andhra Pradesh and the company itself, which was opposed to the idea of merging RINL for fears of its autonomy and supply of steel to the state.

"The ministry is yet to decide on a strategy to solicit a political consensus and it will do so going forward. The benefits for the merger remain strong as RINL will then gain access to captive mines and more resources apart from protection from predators," the source maintained.

About the proposed mergers of Maharashtra Electrosmelt (MEL), Nilachal Ispat Nigam (NINL) and Bharat Refractories (BRL) with SAIL, officials said the respective boards had already approved the merger and now the final nod would have to come from the cabinet before the Union.

SAIL had recently amalgamated with the Indian Iron and Steel Company at the beginning of this year and is in the process of merging with the ailing West Bengal public sector unit National Iron and Steel Company.

Under its corporate plan, the largest steelmaker in the country is targeting production of 22.5 million tonne per annum and has a mandate to produce one-third of the country's steel by 2020, when the National Steel Policy 2004 has envisaged production of 110 MT.