Financial Daily from THE HINDU group of publications
Wednesday, Sep 01, 2004
Corporate - Mergers & Acquisitions
IISCO to be merged with SAIL
Kolkata , Aug. 31
THE Ministry of Steel has decided to merge the nation's oldest steel company, the 130-year-old Indian Iron & Steel Co Ltd (IISCO), with Steel Authority of India Ltd (SAIL).
This was formally announced by the Steel Minister, Mr Ram Vilas Paswan, in the city after an hour-long meeting with the West Bengal Chief Minister, Mr Buddhadeb Bhattacharjee.
According to Mr Paswan, there will be no shortage of funds for the revival of IISCO, which is currently a subsidiary of SAIL and is also undergoing a process of revival based on a BIFR-approved package worth Rs 341 crore.
"SAIL has earned over Rs 2,500-crore profit this year and therefore funds will not be a problem. Whatever is required for IISCO will be given," the Minister told reporters.
SAIL's corporate communications department confirmed the development and stated that an "in-principle" decision had been taken but a formal clearance was necessary from the Union Cabinet and the Board for Industrial and Financial Reconstruction.
"The revival package worked out with the approval of BIFR will continue to be implemented. The government of West Bengal has also agreed to extend the benefits committed to IISCO as a part of the revival package under the approval of BIFR. This will continue even after the merger decision is taken," SAIL stated.
With the merger, IISCO, which was nationalised in 1972 and made SAIL's subsidiary in March 1979, will become the fifth integrated steel plant of SAIL, after Bhilai, Bokaro, Durgapur and Rourkela.
Apart from producing heavy and light structurals, billets, spun pipes and other merchant items, IISCO is a major pig iron manufacturer.
(Crude steel, saleable steel and pig iron output are 3.30 lakh tonnes, 2.65 lakh tonnes and 2.80 lakh tonnes, respectively.)
In the current global steel market, which is facing an acute shortage of iron ore, IISCO is an attractive proposition with its rich mines at Chiria, Gua and Manoharpur.
It has three collieries in Chasnala, Jitpur and Ramnagar. SAIL has been expressing keen interest in the revival of these mines.
As a part of IISCO's revival programme (worth Rs 341 crore), its Kulti works, which employed 2,500-odd people, was closed down in April 2003. Barring 355 people, all opted for voluntary retirement.
The Union Government gave a grant-in-aid worth Rs 186 crore for the associated VRS. Riding on the revival package, IISCO registered a net profit of Rs 27.09 crore in 2003-04 after 30 years.
In the previous two years, IISCO's net losses were Rs 182.32 crore and Rs 179.87 crore.
IISCO's total sales in 2003-04 were Rs 1,051.26 crore against Rs 924.21 crore in 2002-03.
The Steel Minister also said his Ministry had released Rs 40 crore for the ailing Durgapur-based Alloy Steels Plant (ASP), belonging to SAIL, as part of the Rs 50-crore revival package.
"ASP is an organisation of national importance as it is a source of supply for the Railways and Defence sectors," Mr Paswan said. ASP's revival package is based on the recommendations of the Dastur Committee.
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