The government will likely invite financial bids for a 50.79% stake in NMDC Steel “within a month or two” after the operationalisation of the company’s new plant in Chhattisgarh is over by June, a person familiar with the matter said.
“The steel plant is expected to be fully commissioned by June. Work on the strategic disinvestment process, too, is going on fast,” said the person.
The government expects a premium over the current share price of NMDC Steel, said another person. The share price of NMDC Steel, which has risen by over 30% since April, eased 0.16% on Friday to Rs 40.82, against a 1% rise in the Sensex.
“The government wanted to disinvest the steel-making part (NMDC Steel) and not the mining part (NMDC),” said one of the persons. This led to the demerger of NMDC and NMDC Steel last year, following which preliminary bids for the steel company were called for.
On January 27, the government received multiple expressions of interest for its stake in NMDC Steel, with key players such as Tata Steel, JSW Steel, Jindal Steel and Power, Adani Group and Vedanta Group are reportedly in fray.
The government holds 60.79% stake in NMDC Steel. It would offer a 10% stake in NMDC Steel to NMDC once the strategic buyer is finally selected, leaving the 50.79% stake for sale.
NMDC already has long-term strategic tie-ups with NMDC Steel, including for the supply of iron ore, said the person, explaining the reason why it makes sense to offer 10% to NMDC.
According to a report by Emkay Global Financial Services earlier this year, NMDC spent about Rs 20,000 crore in setting up a 3 million tonne per annum steel plant at Nagarnar in Chhattisgarh. The demerger of NMDC Steel would not only unlock the value for shareholders of NMDC, but also improve NMDC’s return profile, it had added.
NMDC Steel strategic sale is part of the government’s efforts to meet its disinvestment target of Rs 51,000 crore for FY24. The government is now focusing on disinvestment of other companies that have already been identified, including IDBI Bank, SCI, and IREDA, before adding other potential candidates to the list, officials had said earlier.
