SAIL to buy Nilachal

Steel Authority of India (SAIL) has offered to take over Nilachal Ispat Nigam (NINL). SAIL chairman V S said the shareholders - Minerals & Metals Trading Corporation (MMTC), which owns 51 per cent stake in NINL, Industrial Promotion and Investment Corporation of Orissa and Metallurgical & Engineering Consultants (Mecon) - are evaluating the offer.

If the proposal goes through, Nilachal will become the second company to join the SAIL fold after Indian Iron and Steel Ore Company (IISCO), whose merger with SAIL was cleared by the Union Cabinet on June16. Jain said the "willingness on the part of the Orissa government to merge" is the prime reason for him being hopeful of merger".

At present, Nilachal Ispat's installed capacity at Kallinga Nagar, District Jajpur, includes 6 lakh tonne of pig iron and 4 lakh tonne of structurals.

NINL's project was initially designed as a two million tonne unit but a huge debt forced the project to be left incomplete. NINL also has a coke plant and captive mines. NINL is the country's largest producer and exporter of saleable pig iron.

On South Korean Steel giant Posco 's entry into the country, Jain said it opens up "greater degree of challenges" for companies. The chairman also tended to sideline with Union government stance that in wake of private competition heating up, it made sense that various Public Sector Steel units should merge.

"It makes no sense for Rashtriya Ispat Nigam (RINL) and SAIL to be competing," said the chairman, who proffered that increasing synergies between public sector companies should be followed on lines of path followed by Mittal Steel and, other steel giant, Arcelor.

Jain also said with the revised mines allotment policy in place, it was "much more easy for companies to set up their steel plants in the state".

With a focus on captive use and mineral processing, the policy stipulates that an application for allotment of mining lease will be considered after the applicant invests substantially in a value addition project within the state.

As per the norm, the lease will be allotted only after the promoter has committed 50 per cent of the proposed investment.

Of late, steel firms making a beeline for Orissa. With 3,567 million tonne of iron ore reserves, 26.50 per cent of India's reserves are in Orissa.

Orissa has substantial reserves of other minerals which go into steel making, such as coal - 51,571 million tonne (24.37 per cent of the national deposit), dolomite - 434 million tonne (10 per cent) and limestone - 1,032 million tonne (1.36 per cent).