STEEL MINISTER'S STATEMENT IN THE LOK SABHA ON IISCO
The Minister for Steel Shri Braja Kishore Tripathy
today made the following statement replying to the calling attention
raised by Shri Basudeb Acharia, MP regarding the situation arising
out of non revival of Indian Iron and Steel Company Ltd. (IISCO),
West Bengal: " The Indian Iron and Steel Company (IISCO), a wholly
owned subsidiary of Steel Authority of India Ltd. (SAIL) was incorporated
in 1918. After a series of mergers in 1952, IISCO became a vertically
integrated steel company with its steel making unit at Burnpur,
captive iron ore mines at Gua and Chiria, coal mines at Chasnalla,
Jitpur and Ramnagore, a captive foundry and pipe making plant
at Kulti and a marketing set up. The Government of India took
over the management of the company in 1972, followed by taking
over of IISCO shares in 1976. In 1978-79, the shares of IISCO
were transferred to SAIL and IISCO became a wholly owned subsidiary
of SAIL. IISCO has continued to make losses over the years due
to technological obsolescence, aging of plant and equipment, outmoded
technology, lack of necessary capital inputs etc. Although several
proposals were drawn up for modernisation of IISCO, none of the
schemes could be taken up for implementation for want of funds.
With the amendment of the Sick Industrial Companies Act (SICA),
IISCO was referred to Board for Industrial and Financial Restructuring
(BIFR) in June 1994 and was declared a sick industrial company
in August 1994. Several schemes for revival of IISCO were envisaged
but none could fructify. Contd…2 -2- During its last meeting held
on 1.4.02, the BIFR noted that Ministry of Steel had sought further
time of 6 months to finalise a rehabilitation proposal for the
revival of the company. BIFR was, however, agreeable to grant
3 months time to SAIL to submit a fully tied up revival proposal
to the Operating Agency (OA) for the revival of the company, failing
which the winding up notice issued earlier would be confirmed
without further hearing. Government of India in February 2000,
approved a Financial and Business Restructuring package for SAIL
which, inter-alia, envisaged write-off of loans and advances of
SAIL/GoI to IISCO for Rs.1946.17 crore as on April 1, 1999. As
a part of the restructuring plan of SAIL, the GoI approved conversion
of IISCO into a Joint Venture (JV) with SAIL holding minority
shareholding. With a view to converting IISCO into a joint venture,
SAIL invited "Expression of Interest (EOI) from suitable companies.
Three parties, namely, BHP Minerals Marketing Australia, M/s Mitsui
Company Ltd., Japan and M/s TYZHPROMEXPORT (TPE), Russia, responded.
The parties carried out due diligence. However, M/s BHP and M/s
Mitsui later indicated that they were not interest in the steel
works of IISCO. This left TPE as the sole contender for the joint
venture. A proposal was submitted by TPE, the only party remaining
in the fray for Joint Venture (JV) for revival of IISCO). The
matter was taken up during the VIII Session of the Indo Russian
Working Group on Ferrous and Non-ferrous Metallurgy held in February
2002, and it was decided to set up a Task Force which will examine
all relevant issues including the economic viability of the proposed
JV and recommend the parameters for the formation of a viable
JV. Meanwhile, SAIL has proposed an alternative revival package
for IISCO which has been based on a report from MECON. At present
this proposal is under consideration of the Government."
