Responding to the falling share of government steel companies in total Indian domestic steel production, the Indian Ministry of Steel has mooted a proposal for the consolidation of state-run steel companies, government sources said on Thursday, October 18.
The sources said that, with rapid capacity expansion projects by Indian steel companies in the private sector, the total production of state-run companies constitutes 20 percent of total domestic steel production, while 80 percent comes from private sector steel producers.
The Ministry of Steel has proposed that consolidation of government steel companies will enable these entities to plan and execute expansion and greenfield projects by leveraging their combined expanded balance sheets, the officials said.
Although he acknowledged that that consolidation proposal is still in a very nascent stage and the government will have to go through several layers of decision-making, the merger of state-run steel companies like Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) was placed on the table as the government has already proposed similar consolidation through mergers of India’s domestic oil and gas exploration and production (E&P) majors, to achieve a higher scale of operations and combined financial muscle, the sources added.
Similarly, on the raw material side, consolidation of state-run mining companies like largest iron ore producer NMDC Limited and KIOCL (formerly Kudremukh Iron Ore Company Limited), has also been mooted by the ministry, the sources said.