By Anurjay Dhal
BHUBANESWAR: With Union PNG-Steel Minister Dharmendra Pradhan and his Cabinet Colleague, Piyush Goyal, Union Minister for Commerce, Industry , Railways and Consumer Affairs, Food & Public Distribution are trying very hard to arrange financier to disinvest the defunct Neelachal Ispat Nigam Ltd located at Odisha’s Chrome rich Jajpur district, joining hands on Thursday with the NINL Executive Association, the Kolkata headquarters, Steel Executives Federation of India, has written a letter to Prime Minister Narendra Modi to take step for Merger of NINL with SAIL, RINL and NMDC instead going for private participation through disinvestment. NEA and SEFI viewed that Divestment of NINL is contrary to the central government’s envision for the development of eastern India under its Look East policy and mission PURVODAYA.
The SEFI in its letter Ref.No.SEFI/2018-20/14 dated 28-01-2021, sent to PMO , copy of which is available with www.indianewsdiary.com, Federation General Secretary Bimal Kumar Bisi urged the Prime Minister Modi to look into the issue as livelihood of some 5000 employees, staffs and workers are at stake since plant closed and salary of last 8 months not paid.
“With due respect and humble submission, we want to draw your kind attention regarding the present scenario of Neelachal Ispat Nigam Ltd. (NINL), a 1.1 MTPA integrated Iron & Steel Plant in Kalinga Nagar, Odisha. Decision of disinvestment of NINL was taken by CCEA on 08 Jan 2020. After the decision of disinvestment taken, all the promoter including major/managing promoter MMTC have stopped infusion of funds, supply of raw materials, as a result severe liquidity crunch has compelled suspension of production from mid 2019. Employees of NINL arethe ultimate victim of the circumstances, employees are pushed for starvation during this COVID-19 pandemic, salaries are stopped for more than 11 months, already 10 numbers of employees have died due to stoppage of ongoing medical facility & salary,” the Letter said, copy of which also sent to PM’s Principal Secretary PK Mishra and Union Ministers Pradhan and Goyal.
“Whether the time frame of 1 year from the decision of disinvestment taken by CCEA on 08 Jan 2020 for disinvestment of NINL set by DIPAM, already 1 year passed and 2 deadlines crossed, disinvestment process is going on at snail’s pace also is unpredictable. As a result more than 10000 families are adversely affected and deprived of maintaining their livelihood.This is for your kind information that NINL has made profit from inception till 2011-12,it is positive EBITDA company till 2019. The capital investment in NINL was only Rs. 747.64 Crore but the required fund for plant set up, required expansion, day to day operation was borrowed from bank, from MMTC and OMC collected as bond. Due to this overburden of liabilities which is presently Rs. 5700 Cr, NINL started incurring huge loss from 2012-13. Although total commission & interest paid to MMTC is Rs.1653 Cr which almost compensate the total loss of NINL. Mining lease was granted to NINL in 1999 but due to deliberate action/inaction of authorities no sincere attempt was made to get mining clearance from the year 1999 till 2019 for about 20 years. After decision of disinvestment of NINL the mines operational activities started very fast which was not possible in the last 20 years,” SEFI said.
“Inspite of loss of NINL from 2012-13, in 2007, 2014 and subsequently in 2015,16 SteelAuthority of India Ltd, particularly Ministry of Steel, Govt of India have shown interest several times for merger of NINL (copy enclosed) considering the infrastructure, plant facility, undisputed land and its own captive mines but unfortunately the same was not materialized due to non-cooperation of MMTC,” it said. “In view of above considering the livelihood of 10000 families mainly of local population including near about 1000 displaced and land looser mostly Adivasi and weaker section of society it will be prudent to revive the earlier proposal, to merge NINL with steel behemoth SAIL or other steel PSUs. Merger of NINL by SAIL will be a ‘win win’ deal both for SAIL and NINL. Transfer of shares by MMTC and other PSUs to SAIL will just be a transfer from one government to another government entity only. Again long shutdown of plant will deteriorate plant machineries, deprecating valuation. Public asset is in unproductive stage from mid 2019 causing colossal national productivity loss, squeezing employment, affecting wages, loss in contribution towards tax, levies etc. to Govt. In this context we humbly suggest and request for immediate resumption of operation of NINL plant & mines, to pay pending employee arrear salary of 11 months, merger of NINL with SAIL, RINL and NMDC, which are under Ministry of Steel,” it added.
MMTC holds majority stake of 49.78 % in NINL while Odisha Mining Corporation and Industrial Promotion and Investment Corporation of Odisha Ltd have 20.47 % and 12 %stakes respectively. Three other CPSUs NMDC, MECON and BHEL hold minor share in NINL.
The last date for submission of EoIs for NINL is March 29. The shortlisted bidders will be asked to put financial bids in the second stage. NINL posted a loss of Rs 402 crore in FY19 and Rs 827 crore in the first nine months of FY20.NINL posted a loss of Rs 402 crore in FY19 and Rs 827 crore in the first nine months of FY20.The Centre on Monday invited expressions of interest (EoIs) for strategic disinvestment of 100% stake in Neelachal Ispat Nigam (NINL) held jointly by four central PSUs and two Odisha government PSUs.
In the two-stage process, the last date for submission of EoIs for NINL is March 29. The shortlisted bidders will be asked to put financial bids in the second stage. The transaction is seen materialising in the next financial year. According to bidding terms, interested bidder/s for NINL must have a net worth of Rs 2,000 crore.
However, again in 2019-20, it suffered Rs 3,910-crore loss in 2019-20.Cabinet to clear sale of Rashtriya Ispat Nigam (RINL) soonThe lender, which is still under the Reserve Bank of India’s PCA framework, had posted a net profit of Rs 30.12 crore for the second quarter.UCO Bank posts Rs 35-crore net profit in Q3, provisions fall 76%
NINL posted a loss of Rs 402 crore in FY19 and Rs 827 crore in the first nine months of FY20.Equity shareholding of NINL consists of Minerals & Metals Trading Corporation (49.78%), National Mineral Development Corporation (10.10%), MECON (0.68%), Bharat Heavy Electricals (0.68%), Industrial Promotion and Investment Corporation of Odisha (12%) and Odisha Mining Corporation (20.47%).
The land bank may be of interest to new investors since it may provide a ready expansion opportunity. Total land area leased to NINL at the existing facility is around 2,500 acre. The plant facilities are located at a strategic location at Kalinganagar Complex, Odisha, with proximity to iron ore and other raw materials. It also has been allotted captive iron ore mine in Sundargarh and Keonjhar districts.The Centre is hopeful that the successful strategic buyer may bring in new management/technology/investment.
In January 2020, the central government approved the strategic divestment of NINL. “Since then, MMTC under the Union Ministry of Commerce and other minor promoters have stopped further funding for running of the plant leading to suspension of production in all units from March 2020,” said Ajit Kumar Pradhan, general secretary of the Neelachal Executive Association (NEA), the employees body. Further, NINL employees have not been paid salaries and other remunerations since March 2020. One month salary was paid in December last year after several protests and numerous representations to the government and NINL management, says the employees. Currently, Odisha High Court is hearing two pleas filed by NEA concerning payment of salaries and seeking intervention in the privatisation of NINL.
NINL was set up in 1982 to undertake manufacturing and sale of steel products in Kalinganagar of Odisha. The company became India’s largest exporter of pig iron from 2004-05 with a present capacity of 1.1 Million Ton per annum. The company has been in loss for the past few years and its current liabilities stand at Rs 3,778.83 crore till the end of September 2019.
“NINL has been undergoing losses for various reasons. For instance, MMTC has financial constraints and has not been willing to pump the required funds to keep the plant in operative mode. MMTC had received excess commission for purchase of raw materials and sale of finished goods of NINL which resulted in its downfall,” said Pradhan. “Any delay in restarting production and sale will lead to loss of revenue to state and central government and will affect the livelihood of 5,000 employees as well as the surrounding beneficiaries. After the merger, NINL will play a major role in the economic activity of the country as well as bringing industrial harmony in the region,” Pradhan said.
He added that the Odisha government has allotted undisputed 2,500 acres of land along with iron ore mines of 110 Million Ton reserve and 50 years of lease expecting that the plant will bring economic prosperity to the state. “The plant has all infrastructure facilities to enhance its capacity to 10 Million Ton per annum without any hassles as regards to availability of land and raw material supply,” he further said.
