Tata Steel, AM/NS India, ESL Steel may participate in NINL divestment

Tata Steel, ArcelorMittal Nippon Steel India (AM/NS India) and Vedanta-owned ESL Steel may participate in the strategic disinvestment of Neelachal Ispat Nigam Ltd (NINL).

“We always look for growth opportunities. Therefore, we are evaluating participation in NINL disinvestment programme as well,” Dilip Oommen, chief executive officer, AM/NS India, said, in response to a query on whether the company would consider participation.

Pankaj Malhan, chief executive officer, ESL Steel, said, “We are serious about the asset. We are a long products company and it’s a logical extension.”

“Also, with the kind of focus that the government of India has on infrastructure, we would like to bet big on longs,” Malhan added.

Sources said that Tata Steel is looking to step up its exposure in long products and is planning to submit an expression of interest (EOI).

While for ESL Steel and Tata Steel, the asset would translate an increase in long product steel capacity, for AM/NS India, it would pave an entry into the segment. About two-third production of long product steel – largely used in infrastructure and construction – is controlled by secondary producers and the balance is with primary steel producers.

The due date for expression of interest (EOI) for NINL is March 29. The Cabinet Committee on Economic Affairs (CCEA) had given an “in principle” on January 8 for disinvestment of 93.71 per cent stake in NINL to a strategic buyer identified through a two-stage auction procedure. The company is jointly owned by central and state PSUs with MMTC, IPICOL, NMDC, OMC as major shareholders.

NINl is a 1.1 million tonne unit, producing pig iron and billets and is located in the Kaliganagar Industrial Complex in Duburi, Odisha.

Malhan, however, said that there was opportunity for expansion of capacity for NINL.

The disinvestment in NINL comes at a time when the steel sector is going through an upturn. Steel prices touched an all-time high in January.

Further, India Ratings expects long products demand growth to be sharp in FY22 supported by a demand push from the government-led infrastructure investments in affordable housing, railways and rural electrification and road networks and due to a lower base of FY21.

Incorporated in 1982, the NINL plant was set up in phases; in phase I, the company set up the blast furnace to produce pig iron, which was commissioned in 2002. Supporting facilities like sinter plant, coke oven plant, power plant, were commissioned subsequently. In Phase II, the steel melting shop was installed for producing billets. NINL has also been allotted a captive iron ore mine in Odisha having an estimated mineable reserve of around 90.91 million tonne.