It is often cynically said that politicians are characterised by promises to make bridges where there are no rivers. The malaise is particularly acute in ministers who handle portfolios, which don?t offer them much in terms of publicity. Let?s take the case of the minister of state for steel, A Sai Prathap, who?s reportedly in favour of merging some nondescript steel PSUs like the Bird group of Companies and Nilachal Ispat Ltd with the Visakhapatnam-based Rashtriya Ispat Nigam Ltd (RINL). The real issue isn?t whether the merger is good or bad?bythe logic of economies of scale in a highly fragmented steel industry, it is good?but whether it is realistic. Are such statements made after assessing the practical possibilities of such mergers or are just a exercise in portraying noble intentions?

For the uninitiated, RINL is a manufacturer of long steel products, which are used in construction. The company?s total capacity is around 3 million tonnes and it is going for expanding the same to 6 million tonnes. If it is merged with say Nilachal Ispat, it would get access to the latter?s captive iron ore mines. Since iron ore is a key raw material for steel making, obviously it would save on costs. Interestingly, NIL is jointly owned by the Orissa government and MMTC.

This is not the first time that RINL has been sought to be merged with another steel firm for either creating a behemoth or creating synergies. In fact, during the NDA regime, RINL was on the list of companies to be divested. It was the strident opposition by the then Andhra chief minister, Chandrababu Naidu, who was supporting the NDA government, which led to its dropping off the list. Some three years ago the government sought to merge RINL with the country?s largest steel manufacturer, the state-owned SAIL. However, it was scuttled by Andhra politicians. Against this background, any minister would know that any move of merging NIL with RINL would be opposed by the Orissa government. This may thus be one of those mergers which never see the light of the day. Why articulate ideas without any background work?

rishi.raj@expressindia.com