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Thursday, July 25, 2024

Privatisation of NMDC Steel to be completed in H1

With the demerger from NMDC completed, the Centre will soon invite financial bids for the privatisation of NSL.

Strategic disinvestment of NMDC Steel, which may fetch the government around Rs 11,000 crore for its 50.79% stake sale, is expected to be completed in the first half of the current fiscal year, official sources said.

This would be the second steel sector strategic disinvestment after Neelachal Ispat Nigam Ltd (NINL) last year. To ensure a smooth sale of the new 3-million tonne/annum steel plant, the government is not averse to the demand of 1,000-odd employees to be absorbed in NMDC rather from NMDC Steel, the sources said.

On January 27, the Centre received multiple expressions of interest (EoI) for its 50.79% stake in the newly built NMDC Steel Limited (NSL) at Nagarnar in Chhattisgarh. Additionally, the Centre would offer a 10% stake in NSL to NMDC after the strategic buyer has been identified through the bidding process.

Only the interested bidders found to be meeting the eligibility criteria would be allowed to participate in the next stage of the transaction which involves detailed due diligence and submission of financial bids.

With the demerger from NMDC completed, the Centre will soon invite financial bids for the privatisation of NSL.

After listing at Rs 30.25 on the stock exchanges on February 20 this year, the share price of the NMDC steel unit has increased 8% to close at Rs 32.7 on Thursday.

The strategic sale is expected to garner substantially higher than reflected by the market share price in the competitive bidding process involving some of the top domestic and global steel firms.

NMDC has already invested about Rs 22,000 crore in building the new plant, which will be commissioned anytime from now, hence, implementation risk is lower. The scheduled date of completion of the plant was March 2023.

After the successful strategic disinvestment of Odisha-based NINL jointly owned by four central PSUs and two Odisha government PSUs for Rs 12,100 crore in January 2022 to Tata Group, NSL would be the second steel firm to be divested.

Demand for steel in India is expected to be driven by increasing infrastructure spending due to growing urbanization coupled with rising income levels of the burgeoning Indian middle class. Several Government initiatives to boost construction and infrastructure sectors like Housing for All, Bharatmala, Smart Cities, Freight corridors, expansion and development of railway networks and shipbuilding, to aid the steel sector.

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