Neelachal Ispat Nigam, partly owned by Odisha govt, to be privatised

The government has invited bids to privatise Neelachal Ispat Nigam Ltd. (NINL), seeking to divest 93.7 per cent stake held by four central public sector enterprises and two Odisha government-owned companies.

The Cabinet Committee on Economic Affairs had in January 2020 given in-principle approval for strategic disinvestment of equity shareholding of MMTC, NMDC, MECON, Bharat Heavy Electricals, Industrial Promotion and Investment Corporation of Odisha (IPICOL) and Odisha Mining Corporation (OMC) in Neelachal Ispat Nigam to a strategic buyer. MMTC owns 49.78 per cent, and NMDC owns 10.10 per cent in NINL, while MECON and BHEL hold 0.68 per cent each. IPICOL and OMC own 12 per cent and 20.47 per cent, respectively. The remaining stake is held by government-owned banks and insurance companies.

The divestment receipts would go to state-owned companies, and not to the government.

Interested bidders can submit their expression of interest by March 29. NINL was incorporated in 1982 to set-up an integrated steel plant to undertake manufacturing and sale of steel products. NINL has a 1.1 million tonne per annum steel manufacturing unit which produces pig iron and billets. The company reported net sales of 801 crore in Arpil-Dec 2019, and a loss of 826 crore.

The interested bidders should have a minimum net worth of Rs 2,000 crore. Any entity permitted to invest in India can submit an EOI either independently or as a consortium member. Government-owned companies are not eligible to participate in the transaction. Employees can participate in the bidding process through a consortium considering the net worth criteria is met.

Through the strategic disinvestment, management and control of NINL will be transferred to a new buyer that will include purchase of shares and infusion of funds into NINL that will be used to repay existing debt of the company. Debt repayment will be detailed in the Request For Proposal stage.

Once shortlisted based on criteria, the bidders would be quote on an enterprise value of NINL. The amount payable by successful bidder would be used for settlement of labour dues, operational creditors, commercial lender debt, promoter debt and purchase of 93.71% of shareholding of NINL through a predetermined waterfall mechanism.