The much-touted proposal of a merger between NMDC and KIOCL is unlikely to fructify as a high-powered committee appointed by the steel ministry has suggested against any such move. If the committee has its way, the PSU’s in the steel sector will have to function as stand-alone units.

The four-member committee was entrusted with the task of ascertaining the business models of the steel ministry’s units — Mineral Sales Trading Corporation, Ferro Scrap Nigam Limited, Hindustan Steelworks Construction Limited and KIOCL. It was asked to assess the potential of these PSUs to generate revenue on a sustained basis and gauge the need for re-organisation and restructuring in these units.

Steel secretary Pramod Kumar Rastogi confirmed that the panel has not recommended any merger or acquisition of any company among themselves and outside. “The committee feels that these companies should work on a stand-alone basis. It has reasoned that would be no synergy by making KIOCL a subsidiary of NMDC,” he pointed out. It has also asked KIOCL to take up forward linkage in value-added products for pig iron plants. The panel asked the Karnataka-based PSU to concentrate on beneficiating haematite iron ore.

Soon after assuming charge, steel minister Virbhadra Singh had announced the constitution of the committee. “There is a critical need to review the structure, functioning and objectives of some of the smaller PSUs of the ministry with a view to maximising efficiency, synergies and the benefits of scale. A Committee set up by my ministry will submit report within 50 days,” he had said. But in effect, the panel submitted its report after four months. Realising that the grinding economic downturn could wreak havoc on its smaller PSUs, the ministry had mooted mergers and consolidation in them to bail them out of the crisis.

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