New Delhi (06.02.2022): TATA Steel became the highest bidder of strategic disinvestment of Neelachal Ispat Nigam Ltd. (NINL); a joint venture of four CPSEs, namely MMTC, NMDC, BHEL, MECON and two Odisha Govt. PSUs, namely OMC and IPICOL. NINL has an integrated steel plant with a capacity of 1.1 MT, at Kalinganagar, Odisha. The company has been running in huge losses and plant is closed since 30.3.2020. The company has huge debt and liabilities exceeding Rs. 6,600 crores as on 31.3.2021, including huge overdue of promoters (Rs 4,116 crore), Banks (Rs 1,741 crore), other creditors and employees. NINL is the first instance of privatization of a public sector steel manufacturing enterprise in India. The success of the transaction is a win-win situation for all, while TATA Steel will confront ahead on employees’ issues. On one hand the transaction is on “going concern” basis and the employees of NINL will continue to be the employees of the company in terms of the Share Purchase Agreement (SPA), which binds the buyer to have a lock-in period of one year, while on other hand a bulk number employees of NINL have been recruited through gross violation of rules and regulations as well as entered through back-door. In past days the High Court of the state has squashed the appointment of few employees of that CPSE, besides that, the NINL management has disobeyed and those illegally recruited are still continuing. A chunk of employees is trying to get scot-free along with financial support through VRS if the strategic buyer should impose it, so to regulate the existing human resources is really tough for TATA in upcoming days.
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NINL acquisition: Challenges for TATA Steel ahead
By IndianMandarins - 2022-02-06 08:53:00
New Delhi (06.02.2022): TATA Steel became the highest bidder of strategic disinvestment of Neelachal Ispat Nigam Ltd. (NINL); a joint venture of four CPSEs, namely MMTC, NMDC, BHEL, MECON and two Odisha Govt. PSUs, namely OMC and IPICOL. NINL has an integrated steel plant with a capacity of 1.1 MT, at Kalinganagar, Odisha. The company has been running in huge losses and plant is closed since 30.3.2020. The company has huge debt and liabilities exceeding Rs. 6,600 crores as on 31.3.2021, including huge overdue of promoters (Rs 4,116 crore), Banks (Rs 1,741 crore), other creditors and employees. NINL is the first instance of privatization of a public sector steel manufacturing enterprise in India. The success of the transaction is a win-win situation for all, while TATA Steel will confront ahead on employees’ issues. On one hand the transaction is on “going concern” basis and the employees of NINL will continue to be the employees of the company in terms of the Share Purchase Agreement (SPA), which binds the buyer to have a lock-in period of one year, while on other hand a bulk number employees of NINL have been recruited through gross violation of rules and regulations as well as entered through back-door. In past days the High Court of the state has squashed the appointment of few employees of that CPSE, besides that, the NINL management has disobeyed and those illegally recruited are still continuing. A chunk of employees is trying to get scot-free along with financial support through VRS if the strategic buyer should impose it, so to regulate the existing human resources is really tough for TATA in upcoming days.
