The Hindu Business Line : Neelachal Ispat plans IPO to fund Rs 800-cr expansion

While the size of the IPO is yet to be finalised, MMTC sources said that the company was planning to raise Rs 250 crore equity capital. The issue would be at a premium.

Currently, with a blast furnace capacity of 1.1 million tonne, NINL plans to add matching steel making capacity and a wire rod mill through the expansion project.

The company has recorded a profit of over Rs 200 crore in the first year of operations in 2004-05 and has also been awarded a captive iron ore mining lease by the Orissa Government. The company has also carried out corporate restructuring by merging its subsidiary Konark Met Coke Ltd with itself during the past year.

According to sources, the lenders consortia led by IDBI is currently reviewing the options of raising more equity contributions to reduce the debt burden along the lines of the AF Ferguson recommendations in 2004.

That report advised the existing promoters to invite 51 per cent strategic investment in NINL for expanding the blast furnace capacity from 1.1 million tonne to four million tonne which, however, was not accepted by the Orissa Government, a co-promoter of the project (MMTC holds close to 60 per cent stake in NINL).

The development also marks the end of a recent proposal by SAIL on picking up a "strategic stake" in NINL.

According to sources, the Union Steel Ministry had sought the Orissa Government's concurrence on the SAIL proposal which, however, was opposed by MMTC.

"We have informed the State Government that we do not require any support from SAIL at this moment. The State Government has accepted our view and has given an in-principle approval to the proposal for an IPO," an MMTC official said.

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