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NINL is in deep financial crisis, hasn’t paid salaries for 3 months. Who is to blame?

NINL is a company that was slated to be disinvested. But after COVID-19, the scenario has changed and left employees in the lurch without salaries for over 3 months

The image shows an NINL employee, Debendra Nath Das, who used to earn Rs 55,000 a month selling vegetables to make ends meet. Das is based in Kalinga Nagar in Odisha.
The image shows an NINL employee, Debendra Nath Das, who used to earn Rs 55,000 a month selling vegetables to make ends meet. Das is based in Kalinga Nagar in Odisha.
  • It was in February that regular employees of NINL were given half-a-month’s salary and since then they have been waiting to get the next salary

  • Since lockdown restrictions were eased on May 31, hundreds of NINL employees have taken to the streets to make themselves heard and have been on protest since

New Delhi: The image is ordinary. It shows Debendra Nath Das seated on the pavement with plastic crates of vegetables and a weighing scale — an ordinary sabziwala anywhere in India. But if you put the image into context, it speaks for itself and the deep financial crisis that Odisha-based steel PSU NINL (Neelanchal Ispat Nigam Limited) is currently facing. Das is a technician and shift in-charge at NINL (Neelanchal Ispat Nigam Limited) and among the company’s 10,000-strong workforce who have not received their salaries for the last three and a half months now. He used to earn Rs 55,000 a month. However, with salary not coming in month after month, he has been forced to sell vegetables as a means of survival.

“I have a mother who is sick at home and suffers from Diabetes and blood pressure. I have a son who is studying to get a diploma. And I have a monthly instalment of Rs 16,500 to pay every month. Because of the RBI directive, I have been spared from paying it for the last three months. But the rest of the expenses are getting too much to bear. I make Rs 500-1,000 in a day from selling vegetables. And that’s barely enough. It’s a very difficult time to traverse. And I am not the only one, there are several other staff at NINL who have been forced to take up low-paying jobs to make ends meet,” says Das.

NINL financial crisis: All operations shut down fully since March 27

It was in February that regular employees of NINL were given half-a-month’s salary. And since then, they have been waiting, says Ranjan Kumar Nayak, General Secretary and Convenor of Neelanchal Bachao Militia Mancha. He adds that contractual employees are worse off because they have not been paid a penny for the last four months. The plant has shut down operations fully since March 27.

We have written letters to Prime Minister Narendra Modi, Odisha Chief Minister Naveen Patnaik, Steel Minister Dharmendra Pradhan, Minister of Commerce Piyush Goyal, MMTC Chairman, District Collector, Labour Minister, among others. But we have received no response from anywhere so far: Ranjan Kumar Nayak

The difficulties posed by the nationwide lockdown imposed on March 24 to contain the spread of the Coronavirus pandemic prevented employee unions and associations from reaching out to authorities in person and the issue has dragged on without being addressed. In the meanwhile, they have written letters, trying to apprise authorities of the grave situation that faced employees of NINL, but are yet to receive a response. “We have written letters to Prime Minister Narendra Modi, Odisha Chief Minister Naveen Patnaik, Steel Minister Dharmendra Pradhan, Minister of Commerce Piyush Goyal, MMTC Chairman, District Collector, Labour Minister, among others. But we have received no response from anywhere so far,” said Nayak. 

Protests on in Odisha’s Kalinga Nagar since June 1

Since lockdown restrictions were eased on May 31, hundreds of NINL employees have taken to the streets to make themselves heard and have been on protest since. “The situation is dire now. And it has to be addressed with urgency. Going by the market condition, no one knows when the government will be able to act on its plan to disinvest NINL. We have demanded that NINL be merged with either SAIL or RINL or NMDC to ensure proper functioning. NINL has 2,500 acre undisputed land sufficient for expansion up to 10 MTPA, captive mine 110 million ton estimated reserve, state of art production units and well connectivity,” says Ajit Kumar Pradhan, General Secretary of Neelanchal Executive Association.

The backdrop

NINL has been piling losses for a long time. The Centre has been considering the revival of the loss-making plant through merger or disinvestment for quite some time and a Cabinet nod was given to the NINL disinvestment plan in January this year. However, at a meeting in September 2019, the government had asked NINL’s shareholders to infuse capital proportionate to their stakes to keep the company running until its disinvestment.

NINL has a complex shareholding pattern with MMTC holding 49.78 percent share and the Odisha government at 32.47 percent. The rest of the shares are held by NMDC Ltd, IDBI Bank, MECON, BHEL and Odisha PSUs IPICOL and OMC. Both Ajit and Nayak said that the Odisha state government, OMC and IPICOL have already infused capital proportionate to their shareholdings, but it is MMTC which is not releasing funds required to meet the working capital expenditure of NINL.

MMTC’s area of expertise is different. It has never run NINL as an integrated steel plant, which would have meant operationalising captive mines along with the plant: Ajit Pradhan

MMTC has choked raw material supply to NINL: Source

Speaking to PSU Watch on the condition of anonymity, a senior executive at NINL, who is not part of any employees’ union or association, says, “Since the time the decision to disinvest NINL has been approved by the Cabinet, MMTC has decided to not infuse even a penny into NINL. Due to some government interference, it has also stopped the supply of raw materials (coal) to NINL. The order seems to have come from the Ministry of Commerce even though it does not have a stake in the company. The MMTC Chairman is the same person who holds the charge of Additional Secretary in the Ministry of Commerce.”

He added, “Since raw materials were not there, we had to shut down the coke oven. And that has dealt a huge blow. We used to supply to SAIL, Tata and Jindal and our coke oven is one of the best in the country. None of the shareholders are ready to infuse funds.” MMTC is responsible for supplying raw materials to NINL and has the trading licence for sale of finished products from the steel PSU. Upon being asked, an official spokesperson for NINL confirmed that MMTC has stopped supply of raw materials to the steel PSU.

A high-level meeting is slated to happen with the Ministry of Commerce and other senior officials of MMTC within a fortnight to chalk out a plan for NINL. Till then, we will have to wait: NINL official spokesperson

‘MMTC has never run NINL as an integrated steel plant’

Commenting on how MMTC has been a bad fit for running a PSU which was steeped in steel production, Ajit says, “MMTC’s area of expertise is different. It has never run NINL as an integrated steel plant, which would have meant operationalising captive mines along with the plant. They only supply raw material and charge a commission of 3 percent. And sell the finished product and levy a charge of 3 percent. They were never interested in starting the mines. If our captive mines would have been started, the plant would have definitely made profit.” Integrated steel plants are large plants which handle everything from putting together of raw material to steel-making.

Ajit says that the idea of operationalising NINL’s captive mines was put before the MMTC Chairman several times but it was not accepted. “The MMTC Chairman went on a different route and went for blast furnace repair first. Since our captive mines were not operationalised at the time that they should have been, it affected the financial health of the company. And what is also noteworthy is that since the time MMTC has expressed its desire to sell off its share in NINL to a private player, they have developed the mines at great pace to attract private entities. Phase I clearance and Phase II clearance have been given within a very short period of time. And these were the same options which were not even being considered before. With the right kind of planning, NINL would have been profitable today,” says Ajit.

PSU Watch has reached out to MMTC for a comment and a follow-up to this story will be published as soon as a response is received.

What does the NINL management say?

Commenting on the future course of action from here, an official spokesperson for NINL said, “NINL is a company which has a board management. The board is governed by the Odisha government, MMTC, BHEL and a bunch of other entities. Since the decision for disinvestment of NINL was approved by the Cabinet last year, MMTC has decided to not infuse in any funds in NINL. MMTC has its own constraints because their financial condition is weak in the wake of the COVID-19 pandemic. And therefore, they have decided to stop the supply of raw materials to NINL. A high-level meeting is slated to happen with the Ministry of Commerce and other senior officials of MMTC within a fortnight to chalk out a plan for NINL. Till then, we will have to wait.”