National Mineral Development Corporation (NMDC), India’s largest iron-ore producer and exporter under the Ministry of Steel, has denied reports of a possible merger or acquisition of another Public Sector Unit under the same ministry, Kudremukh Iron Ore Company Ltd (KIOCL). The company has categorically denied the reports of merger negotiation, saying no official discussion in this regard has taken place so far nor has any formal communication been received from the Government of India for it.
NMDC said on Monday that any decisions on a corporate merger would be managed by the Ministry of Steel in consultation with the Department of Public Asset Management (DIPAM), which comes under the Ministry of Finance.
Some media reports had earlier reported, quoting a senior Ministry of Steel official, that NMDC is eyeing merger or acquisition of KIOCL. The official had said that some discussions on the merger have already taken place between the two and detailed proposals are being worked out so that they could be presented for approval soon.
As per rule, any merger or amalgamation will require additional clearances from other ministries like Finance, and also from regulatory bodies.
What seems to have fuelled such reports is the KIOCL’s inability to start mining operations at Devadari in Karnataka despite incurring huge financial losses.
KIOCL, a mini Navratna public sector Unit (PSU), was set up in 1976 for iron-ore mining and beneficiation at Kudremukh but the unit ran into huge financial crisis with a net loss of over ₹83 crore for the year. Last fiscal its borrowings were at ₹64 crore while lease liabilities were
approximately Rs 116 crore. Further, it is yet to get permission for re- starting iron-ore mining at Devadari while its pellet plants remain un-utilised. Worse, the company has been buying iron ore from the market and it has already leased out operations of one of its pellet plants to NMDC.
