RINL Revives Neelachal Ispat Buy Plan
Acquisition to help the company partly meet Vizag Steel’s iron ore demand. Deal size seen in . 800 cr-. 1k cr range
State-run Rashtriya Ispat Nigam (RINL), that operates the Vizag Steel Plant, has revived talks to acquire Orissa-based Neelachal Ispat Nigam, ahead of a proposed expansion programme. The acquisition would partly meet Vizag Steel’s increased requirement of iron ore. The unlisted RINL is negotiating with the state-owned Minerals and Metals Trading (MMTC) for its 47% equity stake in Neelachal Ispat and expects the transaction to be concluded in the . 800 crore to . 1,000 crore range, according to a senior company official.
“We have had a strategic partnership with Neelachal Ispat and acquiring it is part of the various steps that we’ve planned to ramp up capacity,” said RINL chairman PK Bishnoi. “The negotiations have been continuing for some time, but we have revived the talks as we have decided to meet our targets,” he added.
RINL has outlined major borrowing plans, of up to . 22,500 crore, to finance its phased expansion programme to reach 20 million tonnes by 2020. It is currently close to making 6.3 million tonnes of construction grade steel a year. The Vizag-based steelmaker now sources iron ore from NMDC through quarterly contracts. But once it raises capacity from 6.3 to 11 million tonnes, its consumption of iron ore would go up to 16-17 million tonnes. Neelachal Ispat has a captive mine at Koida with 110 million tonnes of iron ore reserve. “It has also applied for mines adjacent to regions where we have applied. That place is also close to the mines owned by our unit, Bird Group. So there is synergy in such an acquisition,” said Mr Bishnoi.
Acquisition to help the company partly meet Vizag Steel’s iron ore demand. Deal size seen in . 800 cr-. 1k cr range
State-run Rashtriya Ispat Nigam (RINL), that operates the Vizag Steel Plant, has revived talks to acquire Orissa-based Neelachal Ispat Nigam, ahead of a proposed expansion programme. The acquisition would partly meet Vizag Steel’s increased requirement of iron ore. The unlisted RINL is negotiating with the state-owned Minerals and Metals Trading (MMTC) for its 47% equity stake in Neelachal Ispat and expects the transaction to be concluded in the . 800 crore to . 1,000 crore range, according to a senior company official.
“We have had a strategic partnership with Neelachal Ispat and acquiring it is part of the various steps that we’ve planned to ramp up capacity,” said RINL chairman PK Bishnoi. “The negotiations have been continuing for some time, but we have revived the talks as we have decided to meet our targets,” he added.
RINL has outlined major borrowing plans, of up to . 22,500 crore, to finance its phased expansion programme to reach 20 million tonnes by 2020. It is currently close to making 6.3 million tonnes of construction grade steel a year. The Vizag-based steelmaker now sources iron ore from NMDC through quarterly contracts. But once it raises capacity from 6.3 to 11 million tonnes, its consumption of iron ore would go up to 16-17 million tonnes. Neelachal Ispat has a captive mine at Koida with 110 million tonnes of iron ore reserve. “It has also applied for mines adjacent to regions where we have applied. That place is also close to the mines owned by our unit, Bird Group. So there is synergy in such an acquisition,” said Mr Bishnoi.
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