December 02, 2008

Orissa contemplating re valuation of NINL assets- Report

NewIndPress recently reported that the proposed merger of Neelachal Ispat Nigam Limited with Steel Authority of India Limited may get a bit delayed as Orissa government is contemplating to go for revaluation of NINL shares.

The report cited some official as saying that Orissa government had engaged IDBI Capitals for valuation of NINL shares after it decided in principle for merger of the company with SAIL. The merchant banker evaluated the price of each NINL share at INR 27. However, the valuation appears to be very low to Industrial Investment Promotion Corporation of Orissa Limited, the other key promoter of the company. Raising some doubts over the parameters adopted by IDBI for valuation of NINL share, Industrial Investment Promotion Corporation of Orissa Limited recommended Orissa government to go for revaluation of MINL.

The report said that officials believe that the mines granted in favor of NINL were not taken into consideration during valuation of the company. Orissa government has earmarked 1,850 acres of iron ore mines in Sundargarh and Keonjhar districts to NINL however, the mining lease has not been executed due to lack of certain clearances from the center.

Neelachal Ispat Nigam Limited’s 1.1 million tonne capacity pig iron plant is located in Duburi of Jajpur district and Orissa government has provided 2,250 acres of land to the plant, which was planning to opt for capacity addition of four million tonnes. The annual production capacity of the plant is 0.492 million pig iron, 0.276 million tonnes of billets and 0.3 million tonnes of wire rod and beside, it has a 62.5MW captive power plant.

Orissa’s Industrial Investment Promotion Corporation of Orissa Limited has 22% share in NINL, the Orissa Mining Corporation has only 4% stake and the remaining are with MMTC and MECON.