Neelachal Ispat officers ask AP to press for merger with RINL

Visakhapatnam: THE officers of Neelachal Ispat Nigam Ltd (NINL), which owns a 1.1 million tonne Integrated steel plant at Kalinganagar, in neighbouring Odisha, have urged Andhra Pradesh Government to consider merger of their company with Rashtriya Ispat Nigam Limited (RINL) to save both the organisations from being put up for strategic sale.

Neelachal Executive Association has appealed to Chief Minister YS Jagan Mohan Reddy to convince the NDA Government to explore 'mutually beneficial' merger proposals.

Association general secretary Ajit Kumar Pradhan told Bizz Buzz on Friday that NINL owns captive iron ore mines with an estimated reserves of 110 tonnes in Odisha. "We are facing resource crunch whereas RINL is incurring heavy production cost due to raw material insecurity. The merger mooted in 2011 by the Ministry of Steel will solve the raw material requirement of RINL. This will also help NINL in getting a big brand name so as to generate resources for its expansion and wiping out its losses," he said. MMTC Ltd (Government of India Enterprise) is the major shareholder in NINL having 49.78 per cent share. Odisha Government has 32.47 per cent share through IPICOL & OMC. NMDC has 10.12 per cent share in NINL and the remaining shares are with BHEL, MECON and banks and financial institutions. NINL is a positive EBITDA company, which made net profit up to FY2011-12. Due to low equity infusion, insufficient cash flow, commission at high rate (3 per cent) to MMTC upon purchase and sale, overburden of liabilities and interest resulting in low capacity utilisation, restricted production and not using raw materials of own captive mines making the company to incur losses after financial year 2012-13, Pradhan said. He said as per the agenda of Ministry of Steel in 2011-12, it was proposed to make RINL the holding company of NINL.It was shelved following objections raised by MMTC, the principal promoter of NINL.

Interestingly, the total loss of NINL almost compensated the amount paid to MMTC as commission and interest. Presently the outside liability of NINL excluding share capital stands at approximately Rs. 5,700 crore (banks and FIs): Debt owed to the promoters has mounted further, he said.

Total paid-up equity capital as on date is Rs 741 crore. The broad shareholding pattern is as follows: MMTC Rs 369 crore, OMC & IPICOL Rs 240 crore and other banks/FI and CPSE Rs132 crore.

In a memorandum submitted to AP Chief Minister, the association said after the decision taken for strategic disinvestment of 100 per cent equity shareholding in NINL on January 8, 2020, severe liquidity crunch compelled suspension of production. On March 26, 2020 major promoter MMTC declined for further funding and also to supply imported coal. Cokeoven was shut down on account of paucity of imported coking coal from March 26, 2020. Presently all units are under shutdown. Closing down of the plant has resulted in huge revenue loss of more than Rs 2400 crore per annum apart from incapability to contribute towards Central/State exchequer to the tune of over Rs 400 crore per annum in the form of taxes and duties, Pradhan pointed out.