The Hindu : National : ``IISCO-SAIL merger will maximise value''

Online edition of India's National Newspaper
Sunday, Feb 26, 2006

National

National

``IISCO-SAIL merger will maximise value''

Special Correspondent

Manufacture will be consolidated, SAIL can become market leader

Ram Vilas Paswan

NEW DELHI: Steel Minister Ram Vilas Paswan on Saturday said the merger of Indian Iron and Steel Company (IISCO) with its parent public sector steel major, Steel Authority of India Limited (SAIL), would maximise value for shareholders. It would help in achieving scale, integration and flexibility in operations along with greater financial muscle in keeping with the trend in global markets.

The amalgamation would result in a consolidation of manufacture of steel and allied products in one entity and enable SAIL to become one of the market leaders. It would be in the best interest of IISCO, SAIL and their shareholders, he told newspersons here.

With the amalgamation, SAIL as the merged entity was more likely to achieve better financial returns in the long term than what was possible when the two companies operated individually. Mr. Paswan pointed out that SAIL would stand to benefit as the joint manufacturing, financial, managerial and technical resources, personnel, capabilities, skills, expertise and technological prowess would lead to a synergy. This, in turn, would result in increased efficiency and competitiveness in the global market, cost reduction through productivity gains and logistics advantages, and thus contribute to growth. Explaining how all this would come about, he said: "IISCO has Chiri mines, the second highest reserve of iron ore estimated to be 1,000 million tonnes with an iron content of over 62 per cent. Its strategic location would be advantageous to SAIL plants." SAIL's financial and managerial capabilities and availability of vast natural resources like mines, collieries and large infrastructural facilities shall be made available to IISCO and there would be a greater synergy for exploiting the resources to the optimal level."

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