Govt to soon invite bids for privatising NMDC Steel: Report

According to officials, the government is planning to initiate the process of inviting financial bids for the privatization of NMDC Steel Ltd (NSL) after the blast furnace at its steel plant in Chhattisgarh becomes operational. The officials anticipate that the value of the company will increase once the blast furnace is commissioned and operational. NSL is projected to have a production capacity of 3 million tonnes per annum. The government currently holds a 60.79 percent stake in NSL, following its demerger from NMDC, India’s largest iron ore producer. The remaining 39.21 percent stake is held by the public.

As part of the privatization process, the government aims to sell 50.79 percent of its shareholding in NSL, along with management control. Multiple preliminary bids or expressions of interest have already been received for the company. Officials state that the fair value of NSL will be determined once the blast furnace, which is considered the core component of a steel plant, is commissioned and production commences. Only after investors gain confidence in the actual capacity of the company will financial bids be invited.

NMDC Steel was listed on the stock exchanges in February, initially trading at Rs 30.25 per share. Currently, it is trading around Rs 44 per share. Based on the current market price, the sale of a 50.79 percent stake would yield the government approximately Rs 6,500 crore. In October 2020, the Cabinet Committee on Economic Affairs (CCEA) granted ‘in-principle’ approval for the demerger of the Nagarnar steel manufacturing unit from NMDC and the strategic disinvestment of the resulting entity by selling the entire government stake.

Subsequently, on December 1, 2022, the government invited bids for purchasing a 50.79 percent stake in NSL. The remaining 10 percent stake will be offered to NMDC after the selection of the strategic buyer for the majority stake. The privatization process of NSL is expected to be completed in the current fiscal year. The government has set a disinvestment target of Rs 51,000 crore for this fiscal year, of which it has raised Rs 4,235 crore through minority stake sales in public sector undertakings (PSUs) so far.

NMDC Steel

NMDC Steel Limited was formed under Government of India under Ministry of Steel with the help of NMDC’s resources for setting up a 3 MTPA capacity greenfield Integrated Steel Plant based on Hi-Smelt technology in Nagarnar, located 16 km from Jagdalpur in Chhattisgarh state with an estimated outlay of Rs. 25500 crore.