On January 25, the central government sought Expression of Interest (EoI) for the strategic disinvestment or privatisation of the Odisha-based Neelachal Ispat Nigam Ltd (NINL). However, employees of the company, promoted by both central and state public sector undertakings (PSUs), are alleging that the proposed privatisation is arbitrary and are urging the government for its revival or merger with other steel PSUs.
According to a notification released by the Department of Investment and Public Asset Management (DIPAM), the management and control (including mining rights and leasehold rights on the land currently with NINL) of the company will be transferred to the successful bidder.
The major shareholders of NINL include PSUs – Minerals and Metals Trading Corporation Limited (MMTC), Industrial Promotion and Investment Corporation of Odisha Ltd (IPICOL), National Mineral Development Corporation Ltd (NMDC) and the Orissa Mining Company Ltd (OMC).
In January last year, the central government approved the strategic divestment of NINL. “Since then, MMTC under the Union Ministry of Commerce and other minor promoters have stopped further funding for running of the plant leading to suspension of production in all units from March 2020,” said Ajit Kumar Pradhan, general secretary of the Neelachal Executive Association (NEA), the employees body.
Further, NINL employees have not been paid salaries and other remunerations since March 2020. One month salary was paid in December last year after several protests and numerous representations to the government and NINL management, says the employees.
Currently, Odisha High Court is hearing two pleas filed by NEA concerning payment of salaries and seeking intervention in the privatisation of NINL.
NINL was set up in 1982 to undertake manufacturing and sale of steel products in Kalinganagar of Odisha. The company became India’s largest exporter of pig iron from 2004-05 with a present capacity of 1.1 Million Ton per annum. The company has been in loss for the past few years and its current liabilities stand at Rs 3,778.83 crore till the end of September 2019.
“NINL has been undergoing losses for various reasons. For instance, MMTC has financial constraints and has not been willing to pump the required funds to keep the plant in operative mode. MMTC had received excess commission for purchase of raw materials and sale of finished goods of NINL which resulted in its downfall,” said Pradhan.
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He added that the Odisha government has allotted undisputed 2,500 acres of land along with iron ore mines of 110 Million Ton reserve and 50 years of lease expecting that the plant will bring economic prosperity to the state. “The plant has all infrastructure facilities to enhance its capacity to 10 Million Ton per annum without any hassles as regards to availability of land and raw material supply,” he further said.
Divestment of NINL is contrary to the central government’s envision for the development of eastern India under its Look East policy and mission PURVODAYA, argue the members of NEA.
In numerous appeals to the management and union ministries, NEA has urged the government to reconsider its decision of disinvestment and to work out an alternative model for its revival by keeping all the assets of NINL under a central PSU or merging the company with other steel PSUs such as Steel Authority of India (SAIL) or Rashtriya Ispat Nigam Limited (RINL) or NMDC.
“Any delay in restarting production and sale will lead to loss of revenue to state and central government and will affect the livelihood of 5,000 employees as well as the surrounding beneficiaries. After the merger, NINL will play a major role in the economic activity of the country as well as bringing industrial harmony in the region,” Pradhan said.