Ranchi, Sept. 5: The state government is bent on cancelling MoUs signed with 14 companies because of their tardy progress in setting up steel plants in Jharkhand.
The agreements include the one signed with Vini Iron and Steel Udyog, whose premises were raided by the CBI yesterday.
Industry secretary A.P. Singh said the names of the companies were shortlisted a couple of days ago, and all that stood in the path of cancelling the agreements was the chief minister’s approval, which was expected soon.
The 14 firms are Chaibasa Steel Pvt. Ltd, Bhushan Steel Ltd, Horizon Loha Udyog Ltd, Prakash Ispat Ltd, Ispat Industries Ltd, Feegrade & Company Pvt. Ltd, Essar Steel Jharkhand Ltd, BMW Industries Ltd, Sunflag Iron and Steel Co. Ltd, Vini Iron and Steel Udyog, Rungta Mines Ltd, Jai Balaji Industries Ltd, Jagdamba Fiscal Services and Pawanjai Steel and Power Ltd.
While Sunflag Iron and Steel had been allotted a mining lease for iron and manganese in West Singhbhum, Ispat Industries Limited was allotted another chunk in the same area. Essar Steel Jharkhand Ltd bagged iron as well as coal blocks.
According to Singh, though the MoUs were signed between 2004 and 2007, virtually no progress had been made to set up the promised plants on the ground. “Several of them were also allotted coal and iron ore mines,” he added.
The industry secretary was of the opinion that most of the companies had neither resources nor intention to set up the proposed units.
He, however, added that the industry directorate was yet to prepare a dossier of companies indulging in fraudulent practices to make undue profit. In January, chief minister Arjun Munda had directed chief secretary S.K. Chaudhary to create a dossier on the status of all MoUs signed by the state government since 2001 — as many as 100.
So far, the state government has cancelled 28 of 75 MoUs in the steel sector alone on the grounds of poor performance.
Munda’s order was aimed at rogue investors who signed deals with the state and used allocated resources for profit without setting up their promised projects.
The chief minister had then listed several malpractices adopted by dodgy investors. He said a few investors, after being allocated resources like iron ore mines, coal blocks, water and land, sold off their stake — or a sizeable chunk of it — to other parties at astronomical prices.
“Besides, some investors approached banks and financial institutions for funds using the MoU and the allocated resource as tools. A few went for IPOs and created huge wealth for themselves,” he said.
Munda’s move against rogue investors assumes significance now with the CBI booking as many as five companies, including Vini Iron and Steel Udyog, for grabbing coal blocks on the basis of “misrepresentations and false claims in the applications, presentations and connivance or lack of due diligence on part of public servants”.
Promoters of some of the companies had allegedly sold their stakes in an irregular manner after allocation of coal blocks.
For example, Vini Iron, a company with Rs 18.95 lakh working capital, had pledged to invest a whopping Rs 880.64 crore in its proposed integrated steel mill. It had also succeeded in getting allocated a coal block and an iron ore block in Latehar and West Singhbhum, respectively, and later sold the company to Vijay Joshi, a close aide of former chief minister Madhu Koda.
Singh said he had directed the industry directorate to create a report in this regard, but they were yet to submit it. “I have sent the directorate three reminders, the last being three days ago,” he said.
An industry directorate source said they had sought details from the companies and some had responded. “But we are still to compile them,” the source added.