Indian state-run steel producer Neelachal Ispat Nigam Limited (NINL) has sought an immediate cash infusion of around $43-57 million from the Odisha state government, one of the principal stakeholder in the company, to tide it over a liquidity crisis and maintain the capacity utilization of its steel mill, company sources said on Tuesday, July 23.
The sources said NINL, which achieved production growth of 126 percent during the fiscal year 2018-19, has been forced to reduce plant capacity utilization by around 50 percent over the past two months owing to a severe cash crunch and risks a further fall without an immediate cash infusion into the company.
The Odisha government has been approached for the much-needed funds since through its investment arm Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) it holds a 15.29 percent equity stake in NINL, the sources said, adding that government-trading firm MMTC which has a majority stake of 49.78 percent, is itself cash-starved and has already declared its intention of divesting its equity holding in the steel-producing company.
Significantly, it may be mentioned that India’s Ministry of Steel is already working on the merger of NINL with state-run steel producer Rashtriya Ispat Nigam Limited (RINL), which will offer a window to MMTC to divest its existing holding in NINL in favor of RINL once the merger proposal is finalized, the sources added.