HC notice to Centre, state, MP on Manganese Ore stake sale

The Nagpur Bench of the Bombay High Court has issued notices to the central government and the governments of Maharashtra and Madhya Pradesh over the proposed disinvestment of Manganese Ore India Ltd (MOIL), on a writ petition challenging the move.

A Division Bench comprising Justice Dilip Sinha and Justice Bhushan Dharmadhikari, while issuing the notices to the respondents, directed them to file reply within six weeks.

The petition challenging the disinvestment process was filed by the Indian Ferro Alloy Producers' Association, Mumbai, apprehending that the move would lead to closure of all the manganese alloy plants, loss of employment and cause a major setback to the national economy.

Manganese Ore India is controlled by the government of India, which holds 81.57 per cent stake in the company, while the governments of Maharashtra and Madhya Pradesh hold 9.62 per cent and 8.81 per cent, respectively. The Union government had decided to disinvest 52 per cent of the total voting equity share capital in the company along with management control to a strategic investor through competitive bidding process.

At present, the company operates 10 manganese mines. Of this, six are in Maharashtra and four in Madhya Pradesh. The company also operates a ferro manganese plant and EMD plant with an installed capacity of 10,000 and 1,000 tonnes, respectively. The company accounts for 45 per cent of the country's production of high grade ore and one-third of the country's total production of all the grades of manganese ore. The authorised capital of the company is Rs 30 crore.

The company's sales were about 45 per cent of the total domestic consumption of manganese ore, the petitioner said.

The petitioner said the decision to divest the stake was whimsical, capricious and destructive. Madhya Pradesh government too had decided to disinvest its entire voting equity to a strategic investor identified by government of India.

The petitioner said the company's turnover has doubled in eight years from Rs 80 crore in 1994-95 to Rs 177.88 crore now and it had paid Rs 30.80 crore dividend to the government in the last nine years. The disinvestment of such a profit-making public sector undertaking would be detrimental to the interests of the ferro alloy industry and the economic security of India, the petitioner said.