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The Union Cabinet today gave its approval for the merger of Konark Met Coke Limited (KMCL) with Neelachal Ispat Nigam Limited (NINL), the two joint venture projects promoted by MMTC, a Public Sector Undertaking (PSU) under the Department of Commerce. The merger of the two joint venture projects will give the following benefits :
Post merger benefits emanating from Corporate Debt Restructuring Cell (CDR) package approved by Financial Institutions / Banks.
Reduction of debt liability of the company by converting a part of combined debt amounting to Rs. 61 crores of NINL and KMCL into equity/preference share capital.
Replacement of high interest bearing loan with low interest bearing loans resulting in a savings of about Rs. 91 crores per annum.
Waiver of liquidated damage and penal interest.
Conversion of interest and compound interest into Zero Coupon bonds by Financial Institutions / Bank.
Other operational benefits :
Considerable economies can be derived by integrating, and utilizing as a single entity, common facilities of both the companies.
The in-built capacity of each company can be gainfully utilized by the other company by suitably investing in balancing facilities and by removing the production bottlenecks.
The administrative function would get streamlined resulting in more efficient functioning of both the units.
Savings in form of avoiding duplication of Corporate expenses and efforts like maintaining common inventories, compliances of various laws / licence and registration formalities.
Better co-ordination of the overall production activities.
Merger would result in emergence of an integrated steel plant, with concomitant benefits of better capacity utilization, productivity, cost savings and higher profitability,
The merged company would be able to utilize an amount of Rs. 35 crores, which is lying in CENVAT account unutilized in KMCL.
Savings in sales tax on inter company sale of metallurgical coke and blast furnace gas to the merged entity.
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