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After Air India, another sick government company in Tata’s bag, know what is the matter

New Delhi: The country’s largest industrial house, the Tata Group, recently bought the defunct state-run airline Air India. Now another ailing government company is about to come in his bag. Tata Steel says that the process of buying Neelachal Ispat Nigam Limited (NINL) will be completed by the end of this quarter. NINL has an integrated plant of 11 lakh tonne at Kalinganagar in Odisha, but production in it is currently closed. Tata also has a steel plant in Kalinganagar. NINL is a joint venture (JV) of four central government companies MMTC Limited, National Mineral Development Corporation (NMDC), BHEL (BHEL) and MECON Limited and two companies of the Government of Odisha.

Tata Steel had on January 31 announced winning bid to buy 93.71 per cent stake in Odisha-based steel company NINL for Rs 12,100 crore. T V Narendran, CEO and MD, Tata Steel, says that the process of acquisition of NINL will be completed by the end of the current quarter. Tata Steel is looking to build a dedicated long products complex and the acquisition of NINL is crucial for this plan. Tata Steel has again become the highest profit making company for the Tata Group after almost a decade.

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What will be the benefit of Tata Steel?
NINL is an integrated facility company. With this acquisition, Tata Steel can produce long products at a much cheaper cost. Also, Nilanchal Ispat already has the infrastructure. The site of NINL is connected by railway line as well as road. This will make it easier to transport raw materials and finished goods. The Tata Steel plant at Kalinganagar is next to NINL. This will also benefit the company. Both the plants can take advantage of each other’s facilities. Tata Steel has set a target of taking its production to 40 million tonnes by the end of this decade. This deal will help the company achieve this.

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NINL is making huge losses and its plant at Kalinganagar is closed since 30th March, 2020. The company had debts and liabilities of over Rs 6,600 crore as on March 31 last year. This includes huge dues of promoters (Rs 4,116 crore), banks (Rs 1,741 crore), other creditors and employees. As on March 31, 2021, the company’s assets were negative at Rs 3,487 crore and consolidated loss of Rs 4,228 crore.

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