Sail May Rake In Rs 250 Crore Through Bhilai Gas Unit Sale

Steel Authority of India Ltd (SAIL) is likely to realise around Rs 250 crore from divestment of Bhilai oxygen plant, said steel ministry sources.

Sources said the public sector steel major is in the last lap of negotiations and the companies in the fray for the plant are Inox Air Products and Messers Germany. SAIL officials said that due-diligence of the bids is on, but would not comment further on the issue.

Four firms were initially shortlisted for the oxygen plant -- BOC India, Praxair. Inox Air Products and Messers Germany. However, BOC and Praxair pulled out from the race after they felt that the floor price set by SAIL at Rs 403 crore was too high.

Though the last date for the submission of the price bids was January 31, it was later extended to February 15, due to the delay in deciding the floor price. Merchant bankers to the deal are SBI Caps and Dresdner Kleinwort Benson. SAIL has already formed a fully owned subsidiary, Bhilai Oxygen, and the strategic partner would pick up a stake in the arm.

Steel ministry sources said that SAIL had hoped to realise more than Rs 900 crore from divestment of its two power plants at Durgapur and Rourkela Steel Plants, Bhilai oxygen plant and some real estate. According to sources, the company may just fall short of realising this target.

SAIL has already transferred its captive power plants to its subsidiary company named, SAIL Power Supply Company Ltd, and has transferred 50 per cent of its stake in the company to National Thermal Power Corporation Ltd (NTPC). The price of the two units is said to be fixed at Rs 391 crore.

SAIL's realisations from divestment is crucial as the company endeavours to come closer to a break-even position in the current fiscal through restructuring gains.

The company managed to cut its losses by more than half to Rs 729 crore for 2000-01 compared with Rs 1,720 crore in the previous year. Cash profit stood at Rs 415 crore after a gap of two years.

Excluding a non-cash provision of Rs 644 crore, the cash profit works out to over Rs 1,050 crore.