Govt scraps sale of SAIL's Bhadravathi plant on low bidder interest

The government on Wednesday scrapped the privatisation of Steel Authority of India Limited’s (SAIL’s) Bhadravathi plant due to insufficient bidder interest.

The Centre terminated the sale of Visvesvaraya Iron and Steel Plant (VISP) located in Bhadravathi, Karnataka, close on the heels of nixing the privatisation of Central Electronics Ltd (CEL) to Nandal Finance & Leasing saying that the litigation pending against the successful bidder at the National Company Law Appellate Tribunal (NCLAT) violated the eligibility criteria for the sale.

“The cancellation (of the Bhadravathi plant) was long overdue as there was no interest from the bidders in the disinvestment. The private bidders are interested in steel plants that have higher production volume,” a government official said under condition of anonymity.

“Multiple EoIs (expression of interests) had been received and qualified bidders had conducted due diligence. However, due to insufficient bidder interest in proceeding further with the transaction, government of India, with the approval of Alternative Mechanism (Empowered Group of Ministers) has decided to annul the EoI and thereby terminating the present transaction,” the Department of Investment and Public Asset Management (Dipam) said in a statement on Wednesday.

The Empowered Group of Ministers comprises Finance Minister Nirmala Sitharaman; Minister of Road Transport and Highways Nitin Gadkari, and minister of the administrative ministry.

The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on October 27, 2016, had accorded ‘in principle’ approval for strategic disinvestment of three units of SAIL viz. VISP in Bhadravathi, Salem Steel Plant in Tamil Nadu, and Alloy Steels Plant in Durgapur, West Bengal. Dipam had invited EoIs on July 4, 2019, for the strategic disinvestment of VISP. SAIL had appointed SBI Capital Markets as the transaction advisor.

VISP is a special steel unit of SAIL engaged in producing alloy and special steels, including carbon steels, free-cutting steels, case hardening steels, etc. During the current financial year (FY23), so far, Rs 24,543.67 crore has been obtained as disinvestment receipts against the target of Rs 65,000 crore.