The state-owned Odisha Mining Corporation (OMC), a minority shareholder in the MMTC managed Neelachal Ispat Nigam Ltd (NINL), proposes to buyout shares of another state company, Industrial Promotion and Investment Corporation Ltd (IPICOL), to have a greater say in the running of the steel PSU.
At present, the principal promoter MMTC Ltd holds 49 per cent stake in NINL with the rest shares being held by OMC (12.32 per cent), IPICOL (15.29 per cent) and National Mineral Development Corporation (12.87 per cent).
“The entire 27.61 per cent shareholding of government of Odisha (both through IPICOL and OMC) should be consolidated. Since OMC supplies iron ore from its Daitari mines to NINL, and iron ore mines and steel plants are internally linked to each other, it would be better if OMC buys out IPICOL’s stake and increases its holding to 27.61 per cent,” said Saswat Mishra, chairman-cum0managing director of OMC.
OMC, being a cash rich entity, will have no problem in buying out the IPICOL shares, Mishra explained.
“IPICOL will get about Rs 150 crore (as per share valuation by KPMG in 2010-11), which can be utilized by the company for promotion of other industries in the state,” he said in his proposal.
The move behind increasing stake in NINL is to have a voting right during the managerial decision of the company, which is currently run by single majority shareholder MMTC. As per the company laws, a person or entity having 25 per cent or more share in a company can effectively block any major decision.
“Since MMTC is effectively running NINL, there is a possibility of NINL board taking some major decisions which may not be in the interest of Odisha. OMC, at present, cannot block any decision individually,” Mishra argued.
The Odisha government, which earlier evinced interest to take management control of NINL, the largest pig iron maker of the country, instructed OMC to explore possibilities to acquire more shares of the company.
“Before the proposal for acquisition of shares of NINL held by IPICOL is considered, OMC may explore the possibility of acquiring shares of NINL held by MMTC,” the state chief secretary recently said.
MMTC has been searching for buyers to offload a significant portion of its stake in NINL. It has held several talks with Steel Authority of India Ltd (SAIL) and Rastriya Ispat Nigam Ltd (RINL), but these have not progressed due to disagreement over share pricing. The 1.1 million tonne capacity pig iron plant of NINL, located at Duburi in Jajpur district, started operation in 2002. The annual output capacity of the plant is 492,000 tonne pig iron, 276,000 tonne billets and 300,000 tonne of wire rod. It also has a 62.5 Mw captive power plant.
For its phase-II expansion, which intends to add steel making facility to the existing plant, the company has earmarked an outlay of Rs 1,855 crore.