Home/ Economy / Tata, JSPL, JSW, Adani, Vedanta may bid for NMDC Steel’s strategic disinvestment

Tata Steel, Jindal Steel and Power, JSW Steel, Adani Group and Vedanta Group are likely to bid for the government’s majority stake in NMDC Steel Ltd, a steel plant separated from India’s largest iron ore producer, NMDC Ltd, three people familiar with the development said.

The central government will sell 50.79% of its 60.79% holding in the under-construction steel plant at Nagarnar, Chhattisgarh, that is being built with an investment of 20,000 crore. The plant, with a capacity to produce 3 million tonnes per annum, is likely to be commissioned by the end of March.

“The plant will be a good strategic asset, especially for steelmakers looking to add capacity and quickly start production. With its proximity to iron ore mines and connectivity to ports, the steel plant presents a good set-up for integrated steel players," one of the three people aware of the development said, seeking anonymity.

The government will transfer the management control to the winning bidder and list the shares on BSE.

Spokespeople for Jindal Steel and Power and JSW Steel declined to comment. Adani Group, Vedanta Group, the ministry of finance, department of investment and public asset management (Dipam) did not respond to queries till press time. “Tata Steel, as a principle, does not comment on speculative information regarding its future strategy," a company spokesperson said.

The Chhattisgarh government has opposed the plant’s privatization and passed a resolution last year to purchase the plant if the Centre were to privatize it. However, it was unclear whether the state intended to submit a bid or had submitted the bid as of Thursday.

The eligibility criteria set by the government specify that central, state or joint PSEs where the government has more than 51% ownership would not be permitted to participate in the bidding. The conditions also mention that interested bidders, either sole or consortium, should have a minimum net worth of 5,000 crore.

Interested bidders have till 27 January to submit bids. Some of them sought clarity on issues such as the possibility and timing of the sale of the 10% equity NMDC will hold in the plant post the transaction. In the preliminary information memorandum, Dipam said the remaining 10% stake of the government in NMDC Steel would be offered to NMDC. In a recent response to queries from potential bidders, the department said details regarding supplementary transactions would be provided to shortlisted bidders during the second stage of the transaction.

The ministry of corporate affairs approved the demerger of the steel plant from NMDC in October. In December, the government received an in-principle approval from BSE for listing NMDC Steel and has since started the process.

The Centre first approved the disinvestment in October 2020 when the Cabinet Committee on Economic Affairs gave its ‘in-principle’ approval to the demerger of the Nagarnar steel manufacturing unit from NMDC and strategic disinvestment of the entity by selling the entire stake held by the government.

With the initial expression of interest coming in by the month-end, the next steps, including combing through the bids, determining eligibility, opening up virtual data rooms and allowing qualified bidders to begin due diligence, are likely to push the transaction over to the next financial year.

For FY23, the government has set a disinvestment target of 65,000 crore and currently has generated receipts worth 31,106 crore, of which 20,516 crore has come from the listing of India’s largest insurer, the Life Insurance Corp. of India (LIC), in the first quarter of FY23.

For FY24, the government is expected to keep the target the same or lower than FY23’s target, as several of the ongoing transactions, including IDBI Bank, HLL Lifecare, BEML, and Shipping Corp. of India, are set to spill over into the next year.

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Updated: 26 Jan 2023, 11:57 PM IST
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