Centre asks NINL shareholders to infuse working capital till divestment happens

BHUBANESWAR: The Centre has decided that all shareholders of loss-making steelmaker Neelachal Ispat Nigam Ltd (NINL) will infuse capital proportionate to their stakes to keep the company running until its disinvestment, people aware of the development said.The decision was taken last week by commerce and industry minister Piyush Goyal, minister for steel Dharmendra Pradhan, secretaries and senior officials of the Odisha government at a meeting chaired by Goyal.MMTC, the commerce ministry’s trading arm, holds 49.6 stake in NINL, while the Odisha government holds 30.5% in it through its agencies IPICOL and OMC, and NMDC holds about 12.87%.For the next six months, these entities are expected to provide NINL with working capital and money to pay off its interest and dues, and save the company from turning into a non-performing asset, the persons cited earlier said, adding that between them they may spend about Rs 800-900 crore to save this plant of shared ownership.After years of neglect, NINL had seen considerable improvement in its operations in the last few years. However, the Centre’s decision to put NINL up for disinvestment, and promoter MMTC’s reluctance and inability to pump in money left the steelmaker struggling for survival again.In August last year, under vice-chairman Shashi Shekhar Mohanty, NINL executed a de-bottling and capital overhauling of the 1.1 million-tonne pig iron plant in Kalinganagar, leading to 120% (of capacity) production of hot metal. Arrangements had been made with rolling mills to convert billets into TMT bars and, most importantly, its captive iron ore mine (of a 110 million reserve of high-grade ore) had been operationalised. However, since June this year, MMTC has been unable to infuse any working capital because of its own not-so-strong financial position.NINL officials, speaking on condition of anonymity, said that the state-owned trader, despite being the main promoter, prioritised its own revenues and continued to charge a 3% fee as trade margin on all raw material procurement and items that NINL sells only through MMTC. This fee is believed to have been reduced to 0.25%, the officials said.The advantages of captive iron ore were outweighed by the lack of capital and a depressed steel market. It led to the idling of the steel melting shop and the blast furnace at NINL since June. The coke oven and power plant are now operating at 40-43% capacity.Amid this crisis, when salaries started getting delayed, the 6,000–7,000 employees of NINL wanted the central government to intervene. Until disinvestment, the employees union, Neelachal Executives Association, wanted the company’s management to be handed over to Steel Authority of India, which is strategically in a far better position to help NINL.“We could produce coke, which SAIL buys from us anyway, and can use SAIL’s rolling mills for getting value-added products from NINL billets. The 2,500 acres on which the plant is situated can accommodate a 5-10 million tonne steelmaking capacity. SAIL chairman has expressed an interest in setting up another coast-based steel plant, and NINL’s captive mine provides great synergy for SAIL’s expansion plans to reach 30 million-tonne capacity by 2025,” said a member of the NEA. “Delay in running the plant is reducing the net worth of NINL, poor market condition and non-listing of NINL shall not make proper valuation of NINL.”In the past, SAIL and the steel ministry’s other PSU, RINL, have evinced interest in taking control of NINL. However, a senior official who attended last week’s meeting in New Delhi, said the government is unlikely to rethink its decision of divesting its holdings in NINL.

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