Nippon is likely to be the major contender to acquire 30 per cent holding in the company initially. As per the disinvestment commission proposal, the mining company would have to offer up to 76 per cent stake to a strategic investor over a period of few years.

A top KIOCL official said a consortium of Japanese steel mills had also evinced interest for a possible acquisition. During the last fiscal, KIOCL had mandated a German consultancy firm to find prospective suitors for the mining company. At present its paid-up capital stands at Rs 634.51 crore.

The recent Lok Sabha elections had curtailed the pace of the privatisation process. To make things worse, the KIOCL union had also moved a petition in the Supreme Court stating that the divestment proposal would harm the interest of the KIOCL employees.

However, the court rejected the petition and gave the green signal for disinvestment, the official said. As on March 31, 1999, the company's manpower stands at 2,454 consisting of 1,965 workmen and 489 executives.

But industry sources said the company was no longer attractive for global steel majors since KIOCL had not yet got a lease approval from the State Government to undertake mining activities. However, the company had obtained a work permit till July, 2000. The company's current lease expired in July, 1999 after a period of 30 years which saw a negative growth in its bottom line.

The Asian economic crisis and the dwindling offtake by Southeast Asian countries cast its shadow on the performance of the company during 1998-99. During 1998-99, the company clocked a net profit of Rs 25.51 crore (Rs 89.15 crore) on a sales of Rs 547.76 crore (Rs 593.91 crore).

KIOCL is also pursuing the application filed with the Karnataka Government in July 1997 for grant of a mining lease for exploitation of the adjacent Nellibeedu Iron ore deposits.

Meanwhile, Kudremukh Iron Ore Company in association with some partners is commissioning a pig iron plant in Karnataka. The company is looking at setting up of a Rs 150-crore coke-even plant in Karwar, mineral water bottling plant in Kudremukh and its own captive power plant with an outlay of Rs 280 crore. KIOCL is also preparing a project report for recovery of iron ore from the tailing from Lakhya Dam and exploiting primary ore available at the existing mines.

``However, the proposed Rs 4 crore mineral water project is unlikely to come up immediately since the company is yet to finalise the alliance partners,'' the KIOCL official said.