|Bhattacharjee with Paswan. Picture by Sanjoy Chattopadhyaya
Calcutta, Aug. 31: Days after chief minister Buddhadeb Bhattacharjee implored a private entrepreneur to take over Indian Iron and Steel Company, it was announced that one of the world’s oldest running steel companies would remain in the public sector.
The Burnpur-based company will be merged into its parent, Steel Authority of India Ltd (SAIL), which has been running it since nationalisation in the seventies.
After a meeting with Bhattacharjee, Union minister for steel Ram Vilas Paswan said today that a decision had been taken in principle on the merger.
A note containing the proposal will now be placed before the cabinet for approval.
Paswan said Indian Iron (IISCO)’s future would be assured on merger. “Once it is merged with SAIL, funds will not be a problem for the revival of IISCO,” he said.
The announcement is seen as a big victory for the Left Front government, which has been pursuing the case for IISCO’s revival for years. The company employs some 16,700 workers.
It has also set observers wondering if Bhattacharjee’s almost emotional appeal 10 days ago to Sajjan Jindal, the chairman of Jindal Iron and Steel Company, to buy IISCO (“only you can save it”, he had said) was also a ploy to get the Centre moving.
At the chief minister’s interaction with businessmen in Mumbai, Jindal had appeared interested. Apparently, some others were, too.
The company has been suffering losses for the last 30 years, but has huge assets by way of iron ore and coking coal. Currently a 100 per cent subsidiary of SAIL, it has over 2.4 billion tonnes of iron ore deposits in three mines — Chiria, Gua and Mandharpur. Chiria is the second largest iron ore mine in the world. The quality of the mines is also among the best. Coking coal deposits in three mines — Chasnala, Jitpur and Ramnagar — are estimated at 125 million tonnes
Bhattacharjee, looking pleased, said the merger would bring IISCO back to its old glory.
Steel ministry officials said besides the fact that IISCO had already started making profits, at stake was the control of its huge iron deposits. “These are strategic to SAIL’s future growth,” an official said.
The company reported a net profit of Rs 27 crore on a turnover of Rs 1,051 crore for 2003-04, after some 30 years, having slipped into the red three years after nationalisation in 1972. It, however, carries accumulated losses of Rs 955 crore. ( )
Last November, the Board for Industrial and Financial Reconstruction cleared a Rs 881-crore revival package which would continue after the merger.
The company was set up in 1874 as Bengal Iron Works by an English entrepreneur, James Erskine, at Kulti, a plant which is now closed but could be reopened after merger. Burn & Company took over the company in 1918 and the Burnpur steel plant was set up in 1939. It was nationalised in 1972, becoming a subsidiary of SAIL seven years later.