The Hindu : Business : Cabinet approves IISCO-SAIL merger

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Friday, Jun 17, 2005

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Business

Cabinet approves IISCO-SAIL merger

Special Correspondent

Process to be initiated after getting BIFR nod

NEW DELHI: The Union Cabinet on Thursday cleared the decks for merger of the ailing Burnpur-based Indian Iron and Steel Company (IISCO) with its parent and public sector monolith, the Steel Authority of India Limited (SAIL). Approving the merger, it has authorised the Ministry of Steel to initiate the process after getting the nod of the Board for Industrial and Financial Reconstruction (BIFR).

Briefing newspersons the Finance Minister, P. Chidambaram, said the merger would ensure availability of high quality iron ore to SAIL's steel plants.

"With SAIL's financial and managerial capabilities and availability of potentials with IISCO like mines, collieries, large infrastructural facilities and good work culture, there would be greater synergy for capacity expansion and technological upgradation of the plant,'' Mr Chidambaram said.

After being in the red for years together, IISCO earned a profit of Rs. 27 crore in 2003-04 and has reported a provisional profit of Rs. 40 crore in 2004-05.

Incorporated in 1918, it achieved its initial capacity of one million tonne of crude steel during 1953-55. In 1972, the management of IISCO was taken over by the Government and all its shares got vested in SAIL by an Act of Parliament in 1978.

Over the years, IISCO's performance was unsatisfactory, mainly on account of old plant and machinery, obsolete technology and the lack of adequate capital inputs. The BIFR declared IISCO a sick company and placed it under its purview in June 1994. As on March 31, 2004, IISCO had accumulated losses of Rs 954.57 crores and a negative net worth of Rs 620 crores.

SAIL response

Hailing the Cabinet's decision, the SAIL Chairman, V.S. Jain, said: "Now, this will be followed with the required process and SAIL will accordingly take up the matter with the Department of Company Affairs and other agencies concerned... SAIL is now in a position to finalise and implement future plans for further growth of IISCO.''

In a statement here, Mr Jain said SAIL would invest in upgrading various facilities at Burnpur as well as its collieries and mines. The Burnpur plant, which produces around 0.3 million tonnes of steel at present, will be upgraded to enhance its capacity to around two million tonnes by 2011-12.

The Centre of Indian Trade Unions (CITU) has expressed happiness over the merger of Indian Iron and Steel Company (IISCO) with the Steel Authority of India (SAIL).

This is the end of a grave injustice, said a statement issued by CITU here on Thursday hoping that SAIL would take up modernisation and expansion programme in the right earnest to its full potential which may go up to ten million tonnes capacity annually.

Workers' victory: CITU

People of West Bengal, steel workers in the country and workers of Burnpur-Asansol industrial belt should be congratulated on their sustained struggle and determined resistance against its closure that have finally yielded result and the Government has taken the right decision, the statement said.

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