The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave “in-principle” approval to the demerger of Chhattisgarh-based Nagarnar Steel Plant (NSP) from National Minerals Development Corporation (NMDC), and strategic disinvestment of the demerged company by selling the entire government stake to a strategic buyer. The processes of demerger and disinvestment would be initiated together and disinvestment of the demerged company (NSP) is expected to be completed by September 2021. With its approval, the CCEA amended an earlier decision taken in October 2016 to disinvest NSP as a unit of NMDC. After the meeting, Information and Broadcasting Minister Prakash Javadekar said the proposal to demerge NSP into a separate company before its disinvestment will allow NMDC to focus on its core activities of mining. Shareholders of NMDC will also be shareholders of the demerged company (NSP) in the proportion of their shareholding, Javdekar said. After the demerger, investors will have better visibility of the operations and cash flow of NMDC and NSP, he said. The demerger will also be tax neutral from the point of view of capital gains. NSP is a 3-million tonne per annum (mtpa) integrated steel plant, being set up by NMDC in Chhattisgarh’s Nagarnar at a revised estimated cost of Rs 23,140 crore.
NMDC, so far, has invested Rs 17,186 crore in the project, of which Rs 16,662 crore is from NMDC’s own funds; Rs 524 crore has been raised from the bond markets. NMDC’s stock closed 0.95 per cent up at Rs 79.95 on the BSE on Wednesday.