Steel Authority of India (SAIL), has finally decided to merge its wholly owned arm, the Burnpur-based Indian Iron and Steel (Iisco) with itself.
The announcement was made by Ram Vilas Paswan, Union minister for steel, chemicals & fertiliser, after a meeting with West Bengal chief minister Buddhadeb Bhattacharjee at the Writers' Building.
The Union Cabinet's formal approval is now the only thing left between the nearly 5-7 years' dream and the reality.
"The government has decided to merge Iisco with SAIL," Mr Paswan said. He remarked that SAIL has earned over Rs 2,500 crore in net profits this year, and therefore funds would not be a problem for the revival of Iisco.
SAIL chairman VS Jain, who accompanied Mr Paswan during his meeting with the chief minister, said: "We have taken an in-principle decision regarding Iisco's merger with SAIL. Now, the required procedures regarding the merger will be followed."
A SAIL spokesman said the state government has agreed to continue its support to Iisco, as was agreed by the terms of the revival package, cleared by the BIFR in June '02, which is under execution right now.
The possibility of the merger has been speculated for long. The announcement by the minister, therefore, came as a very big relief, not only to the beleaguered Iisco, but also to the West Bengal government. Tuesday's announcement by Mr Paswan may actually end Iisco's struggle for survival, that was turning bleaker by the day ever since the company slipped into the red, a couple of decades ago.
The merger decision, however, couldn't have been better timed. It comes when Iisco, aided by a boom in the steel market, has finally begun to show signs of a turnaround. Ending a two decade-long drought, Iisco did finally manage to rake in a net profit of Rs 27.1 crore last year, on a total turnover of Rs 1,051.3 crore.
Since the clearing of Iisco's Rs 1,089-crore revival package by BIFR, about Rs 186 crore has been earmarked for providing VRS to around 3,000 employees of Kulti Works, which was closed down in March '03. Another Rs 207 crore was also provided to meet cash losses during the limited revival period. A further sum of Rs 354 crore will be spent on providing VRS to about 6,000 employees at the Burnpur Works, the collieries and the mines.
Earlier in June this year, during his first visit to the plant Mr Paswan had announced a modernisation programme of Rs 341 crore. About Rs 230 crore was to be spent on Burnpur plant while another Rs 111 crore was set aside for modernisation of the collieries and mines.
IISCo had a total employee strength of 16,740 as on August 1, 2004, of which some 800 were executives, while the rest, including the workers at the Burnpur Works, collieries and iron-ore mines, belong to the non executive grade.
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