The furnace has been shut down since March 2020 as the company has been facing severe financial crunch since the Cabinet approved its disinvestment in January 2020
With the raw material availability from captive mines and support from financial institutions, we will soon be starting our Blast Furnace, NINL MD said in a message to employees
New Delhi: The year 2021 may augur well for disinvestment-bound Neelanchal Ispat Nigam Ltd (NINL) and its employees, who had to face the double whammy of the Covid-19 pandemic and severe liquidity constraints for the whole of 2020. The government has already allowed NINL to operationalise its captive iron ore mines and sell the produce in the open market. And the PSU may also see its blast furnace returning to operation soon.
In a New Year’s message addressed to employees, NINL’s new Managing Director RK Jha has said that one of the initiatives to improve the cash flow situation of the company would be to restart the blast furnace. PSU Watch also spoke to other sources in the know of the matter who confirmed that it is likely that the steel PSU will go back to business before it is put up on the block for disinvestment. This is being done primarily to address the liquidity crunch facing the company and to also improve its valuation for potential bidders, sources added.
The furnace has been shut down since March 2020 as the company has been facing severe financial crunch since the Cabinet approved its disinvestment in January 2020.
What is the plan to get NINL back to business?
Listing the initiatives that the government is taking to address the financial woes at NINL, the MD said in his New Year’s message to employees, “As Managing Director of NINL, lot of initiative drive have been taken up which will definitely improve the cash flow situation of the company. Expediting mines operation and sale of part iron ore in open market. Restructuring of existing loans by deferment of loan burden. Infusion of additional loan to the tune of Rs 350 crore by the financial institutions and restarting of blast furnace. Despatch of existing saleable product to generate employee’s salary.”
“Accomplishment of these immediate targets will help NINL stay afloat in the volatile steel market around the world. After achieving the immediate target, we will aim for higher goals. With the raw material availability from our own captive mines and support from financial institutions, we will soon be starting our Blast Furnace,” said Jha in his message.
The recent spate of progress comes in the backdrop of a high-level meeting that took place on November 10, 2020. After the meeting, it was decided that NMDC, who is one of the promoters of NINL, will release its balance share of Rs 20 crore to end the stalemate at NINL. MMTC, primary promoter of NINL, was asked to use the proceeds from the sale of finished products lying at NINL to pay part of the salary arrears to employees. In addition, it was also decided that the Managing Director and Director (Finance) of NINL will prepare the accounts of NINL for the year 2019-20 so that a preliminary information memorandum can be floated for NINL disinvestment by the Department of Investment and Public Asset Management (DIPAM). DIPAM has also been directed to create a corpus of Rs 150/175 crore to keep NINL disinvestment-ready.
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