Rashtriya Ispat Nigam Ltd (RINL), which is looking to raise a debt of Rs 22,500 crore to fund its expansion plan, has decided to merge Bird Group with itself. The company’s CMD and director (finance) had been inducted to the board of Bird Group earlier this month.
P K Bishnoi, chairman and managing director, RINL, said: “What we are thinking is that the Bird Group’s holding company, Eastern Investments Ltd (EIL), should be merged with us (RINL). That is only a shell company and has two subsidiaries — Orissa Mineral Development Corporation (OMDC) and Bisra Stone Lime Company Ltd (BSLC). OMDC is a real asset, as it has iron ore, while BSLC has dolomite and limestone.”
About the merger, he said: “At this point, we are looking at the EIL merger. We will have to see the cement plant, etc, in BSLC and a pellet plant in OMDC in future. I think, we can concretise those plans more after one-and-a-half years. It is too early to decide these. We have to first get the board control of Bird Group.”
OMDC has 200 mt iron ore, 400 mt limestone, 300 mt dolomite and 45 mt manganese ore. “If you look at OMDC, it has as much iron ore as India’s leading private sector iron ore miners and, as much manganese as the leading minerals player,” he said.
Based on these reserves of natural resources, Bishnoi feels OMDC is still undervalued and its valuation will only increase going forward.
OMDC’s full market cap stands at Rs 2,725 crore. The company reported revenues of Rs 49.8 crore and a net profit of Rs 22 crore for 2010-11.
He said OMDC had sought six mining leases and had received forest clearances for four. “Environment clearances are in different stages of process. The whole illegal mining issue has slowed down the process, but we are sure that the valuation of the company will go up when all the necessary clearances are received.”
RINL is in the process to raise Rs 22,500 crore debt for its expansion plan to reach 11.5 mt by 2015-16. In total, the company needs Rs 35,000 crore for the expansion and the balance is expected to be generated from its cash, internal accruals and the various joint ventures it is working on.
RINL will commission 3-mt capacity in the current financial year, taking its total capacity to 6.3 mt.
