PTI cited a senior official of Steel Ministry as saying that the proposal to set up a steel plant jointly by state owned NMDC and Russia's Severstal has been put in cold storage as both the companies are not willing to lose management control of the JV.
The official said that the Ministry is apprehensive that any lenience towards the foreign investor may potentially affect the agreement another PSU SAIL had with South Korea's POSCO to form a JV company at Bokaro for a 3 million tonne per annum steel making unit last year with INR 16,000 crore investment.
NMDC had inked an MoU with Russia's second largest steel maker Severstal in late 2010 for a 3 million tonne per annum capacity plant in Karnataka with around INR 16,000 crore investment.
However,differences cropped up between the companies on shareholding patterns as both wanted more than 50%in the proposed JV in order to gain management control.
The official who requested anonymity said that"As per the international financial reporting standards which India is going to follow from next fiscal,whoever has the management control will consolidate the subsidiary accounts in its accounts.Our government wanted the JV financials to be reflected in our books.As of now the issue is in cold storage,"adding that any decision in favour of Severstal may impact POSCO agreement also.
As per the protocol,NMDC and Severstal will have to meet the JVs captive requirements for raw materials.
Until the captive assets are fully developed,both the companies will supply coking coal and iron ore to the JV from their existing assets or alternative sources.
The official said that"The other issue is mining ban in Karnataka.Until the ban is lifted and captive mine is allotted to the JV,the issue will not be taken up.NMDC is not willing to give its iron ore mines for the JV."
