28 JUN, 2012, NAGESHWAR PATNAIK, ET BUREAU
BHUBANESWAR: The promoters of Orissa Sponge Iron and Steel on Wednesday decried attempts by some steelmakers to take over the management of the company and said their choice of a partner to revive the loss-making firm is still Monnet Ispat.
"We were looking for a strategic partner who was not very large and had similar outlook and exposure to sponge iron and steel industry. Many large houses had contacted us and held discussions. We chose Monnet Ispat and Energy as the appropriate strategic partner rather than one of the larger business houses such as Bhushans, Essar, Jindals etc," OSISL managing director PK Mohanty told ET on Wednesday.
"We have already signed the agreement with Monnet. There is no question of further dilution of our stake in the company," Mohanty added.
Earlier, the Bhushans failed in their negotiation for total takeover of OSISL. "We were all along looking for a strategic partner. We have very good relations with Bhushans, who are the leaders of the coal block allotted to us. They offered to buy us out but we were not keen at all to part with the company which we built over the years. They are, however, welcome to invest in the company," Mohanty said. On Tuesday, Bhushan Steel, promoted by Brij Bhushan Singal and Neeraj Singal, revived their open offer, originally made in 2009, to buy up to 20% in Orissa Sponge at 360 a share. Monnet Ispat will also pitch for 20% stake at 310 a share.
OSISL, which was previously known as Orissa Sponge Iron Ltd (OSIL), was incorporated nearly 30 years ago in April 1979, as one of the first joint sector enterprise between Industrial Promotion and Investment Corporation of Orissa Ltd (IPICOL) and Torsteel Research Foundation in India (TRFI), established by Dr Mohanty. It commissioned the first coal-based sponge iron plant in the country in 1984 at Palaspanga in Keonjhar district.
OSIL had signed an MoU with the Odisha government to set up a one million tonne per annum steelmaking capacity and have been looking for a strategic partner since 2006. It received iron ore mines lease allocation from the central government in 2002, and the state government's approval in 2004. By 2007, it got all the statutory clearances to open up the iron ore mines, except forest clearance, which is in advanced stage.
Interestingly, the iron ore and coal mines has been the cause of the interest in OSISL. But the promoters still have the majority stake. TRFI and associates have 44% stake and IPICOL has 6%. "We have agreed to sell half of TRFI share to Monnet to induct them as a strategic partner to carry forward the expansion of the existing plant," Dr Mohanty said. The suave scientist-turned-entrepreneur, Dr Mohanty, made it clear that he is not bothered about the "spat" over the takeover bid. "Ours is a transparent management. Now after a three-year battle, the public offer will get closed in July and we will carry forward our plan to expand the plant with Monnet and IPICOL," he asserted.
The public offer with closing dates were announced by Sebi following the direction of the Supreme Court to complete the formality while disposing of a case filed by Bhushan Steel and Power against OSIL.
OSISL, meanwhile, has suffered heavy losses and reported net loss of over Rs 180 crore in the last five years due to higher input cost and lower sales realisation. "High cost of raw materials, including iron ore and coal and low sale price of steel has eaten away all our equity infusion over the years. No steel plant can survive without access to captive iron ore mine these days," Dr Mohanty added.
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