The central sector steel behemoth, Steel Authority of India Ltd (SAIL), is likely to divert the Rs 12,300 crore investments it planned for Nilachal Ispat Nigam Ltd (NINL) as the Orissa government is delaying the process of merger. Even though a policy decision has been taken at the level of department of disinvestments, government of India, for the merger of the Orissa-based pig iron plant with SAIL, the state government is taking one pretext or the other to delay the merger process, a top SAIL official told FE.
The state government recently informed the Centre that the share prices arrived at by the independent valuer, IDBI, are not acceptable to it. IDBI has put the price at 2.76 times more on the face value of Rs 10 per share. The state government has written to the Centre requesting it to go for a fresh valuation of NINL.
The state chief secretary, Ajit Tripathy, and other top officials, who attended the high-level merger meeting recently, did not object to the valuation carried out by IDBI. Stating that the state government plea is only aimed at delaying the merger, the official pointed out that appointment of a new valuer and assessment of the value of the company would take at least three to four months.
SAIL has submitted a plan to the DoD for investment of a total Rs 12,300 crore in NINL for converting it into a steel plant and ramping of the capacity by 2015. Out of the Rs 12,300 crore, SAIL would invest Rs 2,300 crore to make NINL achieve 1 million tonne of finished steel production by 2010-11.
To make NINL achieve its full potential, SAIL has envisaged an expansion plan to ensure an additional capacity of about 2.5 million tonne, thus making it a fully integrated steel plant with a capacity of 3.5 million tonne by the year 2015 with an investment of another Rs 10,000 crore.
With the merger getting delayed, SAIL may take a decision about its investments plans for NINL.
Meanwhile, the joint action committee (JAC) of NINL has demanded that the state government should take immediate steps for merger of the company with the SAIL. The JAC president, PR Das, and general secretaries AK Prusty, PK Jena, and BK Patra have threatened that workers and executives of the plant would resort to agitation if the state government delayed the merger.
“The state government should not suspect the integrity of the IDBI,” said Das, adding that IDBI has chipped in with Rs 12.96 crore into the total Rs 399.79 crore equity base of the company.
The Orissa government has equities worth Rs 105.12 crore, while the Central sector star trading house, MMTC Ltd, has chipped in with Rs 199 crore. National Mineral Development Corp (NMDC) and MECON have equities worth Rs 49 crore and Rs 5 crore, respectively.