National Iron & Steel Company Limited ( a wholly Govt. owned company)

NISCO was set up as a mini steel plant by Mr N. D. Agarwal in 1934 at Belur, Howrah with two rolling mills for manufacturing rolling products.

The Company started to incur losses in the mid-sixties which spiralled into its eventual closure in 1970. It was taken over by Government of India in 1979, with the management being controlled by GOWB. In 1984, Government of West Bengal purchased its assets and incorporated it as a wholly owned company under the name National Iron and Steel Company (1984) Limited. In 1999, the management decided to modernize the factory through installation of an 18" bar mill with an annual production capacity of 30,000 tonnes of Cold Twisted Deformed (CTD) bars. The modernization plan including the techno economic analysis and feasibility study was prepared by the Steel Authority of India Limited (SAIL).

The new plant was commissioned as per recommendations of SAIL under a mutual understanding that SAIL would purchase half of NISCOs production of CTD bars while the other half would be sold directly to other customers in the market. Also, it was understood that SAIL would provide NISCO with all the raw material (100*100 cc billets) it required for running the plant at 80 per cent capacity utilisation.

However, once the new bar mill commenced commercial operations in September 2001, neither of these arrangements with SAIL could materialise. The Company did not receive requisite quantity of billets from SAIL and did not have sufficient working capital to procure them directly from the market. The Government also entered into discussions for the strategic transfer of NISCO to SAIL. Despite repeated negotiations and discussions that carried on till 2010-11, there was lack of mutual agreement on the terms of the transfer.

Present Status

NISCO stopped commercial production in Sep 2005. It manages little through trading activities and is dependent on grants/loans from the Government of West Bengal for its survival.

in the current setup, NISCO does not perform well against any of the critical success factors for the steel industry. The most important factor that constrains its viability is the absence of adequate working capital and operating surplus. Even if NISCO (i) did not face any constraint in terms of market demand or client base, (ii) could operate at 100% capacity utilisation with the existing workforce, and (iii) operating expenses were comparable with industry benchmarks, it would still fail to break even financially, i.e., production of CTD bars would continue to yield negative cash flows even at full capacity utilisation.

As such, business viability for NISCO does not appear feasible in the existing operating environment. The Company lacks critical infrastructure for movement of goods. Its work force consists of largely unskilled labour and is devoid of managerial expertise. A shift to TMT bar production will require an approximate investment of Rs 8 crore in machinery (quenching facility, civil foundation, shear and electrical systems, cooling infrastructure), Availability of good quality billets will continue to pose a challenge.

In view of above, Government of West Bengal initiating proceedings for voluntary closure of the company. This process was involved -

(i) completing all the legal formalities as per the relevant provisions of the Companies Act 2013,
(ii) assessing and disposing off liabilities,
(iii) disposal of assets, and
(iv) redeployment/ release of workforce.