Financial bids for a majority stake in Chhattisgarh-based NMDC Steel (NSL), an arm of Union government-owned miner NMDC, will likely be delayed till Lok Sabha elections are over in May next year. The deferment of the proposed sale of the Centre’s 50.79% stake in NSL is because the privatisation plan is being opposed by the Congress, which runs the incumbent government in Chhattisgarh, at the hustings.
The stake on the block is expected to fetch at least Rs 11,000 crore to the Centre, given NSL’s new 3 million tonne per annum (mtpa) hi-smelt technology at Nagarnar.
With the operationalisation of the blast furnace, the steel plant based on new technology has recently become fully operational. Investor interest in the plant is seen to be robust, and due diligence for financial bids were about to be under way.
NMDC has already invested around Rs 22,000 crore in the new plant, with almost nil implementation risk.
After listing at Rs 30.25 on the stock exchanges on February 20 this year, the share price of the NSL has increased by 36% to around Rs 41 as of October 23.
The strategic sale is expected to garner substantially more than reflected by the market share price in the competitive bidding process, involving some of the top domestic and global steel firms.
On January 27, the Centre received multiple expressions of interest (EoIs) for its 50.79% stake in the newly built NSL at Nagarnar in Chhattisgarh. Additionally, the Centre would offer another 10% stake in NSL to NMDC, after the strategic buyer has been identified through the bidding process.
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. Steel is a non-strategic sector and as per the new policy, the Centre would privatise all viable steel units in due course.
With most of the strategic sales being postponed to next year in view of the several assembly elections in November and general elections in May, the pace of disinvestment has become modearte.
The Centre has mobilised just Rs 8,000 crore or 16% of the FY24 disinvestment revenue target of Rs 51,000 crore, so far in the current financial year.
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