Kolkata: The management of state-run Rashtriya Ispat Nigam Ltd, or RINL, said it has told the steel ministry that it wants to combine with the country’s leading miner NMDC Ltd, earlier known as National Mineral Development Corp. Ltd, to better access iron ore.
P.K. Bishnoi, chairman of the Visakhapatnam-based steel maker, said here on Friday that the combined entity will create a behemoth. “The merger would enhance operational efficiencies. We have 22,000 acres of land, port, technology, manpower… all we need is iron ore,” he said.
Big plans: Rashtriya Ispat chairman P.K. Bishnoi said the merger would enhance the operational efficiencies of the combined entity. Photograph: Ramesh Pathania / Mint
NMDC already plans to produce steel at a factory in Chhattisgarh with technical support from RINL. “It would be in the best interest of both companies to merge. The merged entity could ramp up steel production capacity to 20-25 million tonnes (mt) by 2020,” Bishnoi said.
Asked about RINL’s proposal, NMDC’s chairman Rana Som said he hadn’t heard of it before. “It’s a hypothetical situation… I can’t comment on it immediately,” he said.
RINL, according to Bishnoi, is “open to all options.” Its management wouldn’t object to the company getting merged into NMDC, which also is under the administrative control of the steel ministry.
The government owns 98.38% of NMDC’s shares. RINL is wholly owned by the government.
Mint couldn’t immediately ascertain whether the steel ministry has replied to RINL.
NMDC controls the Bailadila iron ore mines in Chhattisgarh, and produces around 30mt of high-grade ore a year.
RINL has been looking to join forces with NMDC for quite some time. Last year, it signed an agreement with NMDC and Steel Authority of India Ltd, or SAIL, to set up a 4mt steel plant in Chhattisgarh through a three-way venture, but the partnership fell through. NMDC then sought technical support from RINL.
Earlier, the government had wanted RINL to merge into the country’s biggest steel manufacturer, SAIL, but the proposal was dropped last year because the Andhra Pradesh government objected to it.
RINL, which produces 3mt of steel a year, is looking to raise capacity of its Vizag steel plant to 16mt in the next 10 years. It also plans to expand elsewhere. The firm is also looking to tap mineral reserves, and has bid for limestone deposits in Oman in partnership with SAIL.
RINL’s executive director M.V.R. Sarma said his company was looking to buy an iron ore mine in Canada as well.
RINL posted a 42% increase in 2007-08 net profit at Rs1,943 crore. Its turnover was up 14% at Rs10,433 crore.