SAIL merges MEL, plans Rs 1.5K cr infusion

State-run SAIL today said it has merged Maharashtra Elektrosmelt (MEL) with itself and plans to infuse around Rs 1,500 crore fresh capital in the ferro-alloys maker for expanding its capacity and putting up a power plant.

Existing MEL shareholders would get one share for every 1.7 shares they held in MEL, Steel Authority of India said in a statement, adding that it received the approval for merger of MEL from the Ministry of Corporate Affairs last month --- more than five years after it started the process.

"The final order of amalgamation of MEL with SAIL has been filed with Registrar of Companies at Delhi and Mumbai. It has been decided that all the public shareholders of MEL shall be allotted SAIL shares in a swap ratio of 1.7:1," SAIL said.

MEL, in which SAIL has 99.12% stake, has around one lakh tonne per annum manganese-based ferro-alloys making capacity now at its Chandrapur facility in Maharashtra. MEL uses submerged arc furnace (SAF) route for manufacturing the steel-making raw material.

A third SAF with capacity to produce about 90,000 tonnes of additional ferro-manganese would be built at the plant at an estimated cost of about Rs 200 crore, SAIL said.

"The process of awarding of contract to the successful bidder is likely to be competed shortly," the statement said.

SAIL also plans to set up a four mega watt power plant, using gases as a by-product from the proposed third furnace, entailing an investment of Rs 36 crore within the plant.

The maharatna company said it was also exploring possibility of setting up a captive power plant of undisclosed capacity through the joint venture route within the MEL plant area in order to produce cost-effective ferro-alloys. Investment for this project is expected to be around Rs 1,200 crore, it said.

"Commensurate with SAIL's further expansion plans, MEL's expansion will be pursued for meeting the full requirement of ferro-alloys of the SAIL steel plants," the company Chairman C S Verma said.

SAIL has 14.6 million tonne per annum (mtpa) crude steel making capacity now and work is at various stages of completion to take the capacity to 24 mtpa.