Lok Sabha Question No. 3526 (UNSTARRED), answered on 2015-12-21
Subject: Joint Venture between MMTC and NINL
Ministry: COMMERCE AND INDUSTRY
Asked by: VIJAY KUMAR S.R.

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 3526 TO BE ANSWERED ON 21 ST     DECEMBER, 2015

JOINT VENTURE BETWEEN MMTC AND NINL

## 3526. SHRI S.R. VIJAYA KUMAR:

Will the Minister of COMMERCE & INDUSTRY ( वाणिज्य एवं उद्योग मंत्री ) be pleased to state:

- a) whether the Metals and Minerals Trading Corporation of India (MMTC) has entered into a joint venture with the Neelanchal Ispat Nigam Limited (NINL);
- b) if  so,  the  details  thereof  along  with  the  progress  on  NINL  since  the  start  of  its commercial operations indicating its profits and losses and capacity utilization and the reasons for losses and capital underutilization,if any; and
- c) the  details  of  commission  earned  by  MMTC  from  NINL  on  procurement  of  raw materials and marketing its products till date?

## ANSWER

वाणिज्् य एवं उद्योग राज्् य मंत्री ( ीीमीी ालमर्िा णीीारमि ) ( स्वींत्र प्रभार )

THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (INDEPENDENT CHARGE)

(SMT. NIRMALA SITHARAMAN)

- (a)  &  (b)      Neelachal  Ispat  Nigam  Limited  (NINL)  is  a  Joint  Venture  with  the  shareholders  being Metals  and  Minerals  Trading  Corporation  (MMTC)  (49.78%),  Government  of  Odisha through their two PSUs namely Industrial Promotion & Investment Corporation of Odisha Ltd.  (IPICOL)  (15.29%)  and  Odisha  Mining  Corporation  (OMC)  (12.32%),  National Mineral Development Corporation (NMDC) (12.87%), MECON (0.86%), Bharat Heavy Electricals  Limited  (0.86%),  Financial  Institutions/Banks  &  Others  (8.02%).  Year-wise details of the performance of Neelachal Ispat Nigam Limited (NINL), since the start of its commercial operations in 2004 in terms of profit and losses and capacity utilization, are as follows:

| Year    |   Profit &Loss (in Rs. crores) |   Capacity Utilization (%) |
|---------|--------------------------------|----------------------------|
| 2004-05 |                         106    |                      56.02 |
| 2005-06 |                          14.74 |                      61.82 |
| 2006-07 |                          57.8  |                      62.03 |
| 2007-08 |                         120.44 |                      49.15 |
| 2008-09 |                          79.23 |                      48.37 |
| 2009-10 |                          37.93 |                      65.39 |

| 2010-11   | (-)173.14   |   58.45 |
|-----------|-------------|---------|
| 2011-12   | 29.45       |   51.85 |
| 2012-13   | (-)79.14    |   48.17 |
| 2013-14   | (-)147.22   |   58.69 |
| 2014-15   | (-)232.67   |   54.84 |

Source: MMTC

Since commencement of commercial production in 2004-05 NINL has made profits for 7 years out of total eleven years of its commercial operation.  The reasons for losses in recent years are mainly because of severe global recession since 2008-09 particularly in the steel sector leading to reduced  demand  for  steel  and  allied  products.  Moreover,  global  increase  in  capacity  and production has forced down global steel prices leading to more imports into India and low sales realizations for indigenously produced steel. In addition, the ban on mining of iron ore in some areas also led to steep increase in the prices of raw materials as well as inadequate supply of raw materials. The major reason for less capacity utilization is due to delay in commissioning of Steel Melting shop and irregular supply of raw materials.

- (c)   As per Agreement entered between Metals and Minerals Trading Corporation of India (MMTC) and NINL,  MMTC has been earning a trade margin @ 3% from NINL towards facilitation of MMTC's diversified India wide marketing network as well as infrastructural / logistical support for  sourcing  of  essential  raw  materials  like  iron  ore  fines,  calibrated  lumpy  ore,  manganese, dolomite, coking coal etc. and marketing of all the finished products and by-products of NINL in the domestic as well as international market. The details of trade margin earned from 2004 till 2014-15 by MMTC against the total investment and other financial support made so far are as below:-

|   S.No. | Year    |   Trade Margin (Rs. Crs.) |
|---------|---------|---------------------------|
|       1 | 2004-05 |                     33.24 |
|       2 | 2005-06 |                     36.05 |
|       3 | 2006-07 |                     48.12 |
|       4 | 2007-08 |                     51.8  |
|       5 | 2008-09 |                     67.32 |
|       6 | 2009-10 |                     58.04 |
|       7 | 2010-11 |                     51.23 |
|       8 | 2011-12 |                     79.77 |
|       9 | 2012-13 |                     77.85 |
|      10 | 2013-14 |                     74.14 |
|      11 | 2014-15 |                     59.39 |

Source: MMTC

******