Govt okays Japan’s Konoike Transport as strategic buyer of state-run Ferro Scrap

The government has approved the disinvestment of Ferro Scrap Nigam Ltd (FSNL), allowing Japan's Konoike Transport Co. Ltd’s ₹320 crore bid for taking over the Chhattisgarh-based mining and metals company with full management control.

“The alternative mechanism, empowered by the Cabinet Committee on Economic Affairs (CCEA), comprising Nitin Gadkari, Union minister for road transport and highways, Nirmala Sitharaman, Union cabinet minister for finance and H. D. Kumaraswamy, Union minister of steel, have approved the highest bid amounting to ₹320 crore of M/s. Konoike Transport Co. Ltd.  for sale of 100% equity shareholding of MSTC Ltd in Ferro Scrap Nigam Limited (FSNL) along with transfer of management control,” a statement from the finance ministry said on Thursday.

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FSNL, a 100% subsidiary of MSTC Ltd. under the ministry of steel, was incorporated in 1979 to provide steel mill services. It specialises in the recovery and processing of scrap from slag and refuge generated during iron and steel making across different steel plants.

CCEA had granted in-principle approval in October 2016 for strategic disinvestment of the entire equity shareholding of MSTC in FSNL to a buyer to be identified through a two-stage auction process.

Following a competitive bidding process, professional advisers were appointed for the transaction.

The bidding

The preliminary information memorandum (PIM) inviting expression of interest (EoI) from prospective bidders was issued on 31 March 2022, with the last date of submission being 5 May 2022, subsequently extended till 17 June.

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Six entities expressed their interest, of which five bidders were shortlisted as qualified bidders. Post-shortlisting, the qualified bidders conducted due diligence on the company. Also, the security clearance was obtained from the ministry of home affairs in respect to four bidders.

The request for proposal (RFP) along with share purchase agreement containing terms and conditions was issued on 2 January 2024, inviting financial bids.

Two sealed financial bids were received from the qualified bidders. Konoike Transport's bid was approved, as it was the higher of the two bids.

Konoike Transport Co. is a Japan-based company engaged in providing logistics services. The company offers industrial process services, including distribution centre contracting, warehouse management, distribution, safety supervision, onsite manufacturing processes at steelworks, factory line operation, as well as ground, sea, and air freight transport services.