SCI, NMDC Steel at advanced stages of strategic sale, await nod from PMO

SCI, NMDC Steel at advanced stages of strategic sale, await nod from PMO

The government's disinvestment agenda is very much on, if at an unsteady pace, according to a senior government official. Some public sector undertakings (PSUs) are at an advanced stage of strategic sale but are awaiting the nod from the top political levels, the official said.

While the government has decided to not set divestment targets to chase in the budget, DIPAM, or the finance ministry's Department of Investment and Public Asset Management is hoping to push through strategic sales in companies like Shipping Corporation of India (SCI) and NMDC Steel Limited (NSL).

“NMDC Steel's strategic sale is at an advanced stage. All the work is done, only financial bids need to be invited. It’s a ripe case for privatisation. The government can do it but without a go-ahead from the PMO (Prime Minister's Office) nothing will happen. There is uncertainty,” the official told Moneycontrol on condition of anonymity.

The NSL divestment is fraught with political challenges. Workers’ unions have been opposed to the move. The company employs 5,887 people and has Rs 36,929 crore of assets.

Interestingly, home minister Amit Shah at an October 19, 2023, election meeting in Chhattisgarh's Bastar region said that the Nagarnar steel plant in the area would not be privatised. This is important since the steel plant is the bedrock of NSL, which was spun out of NMDC as a separate company to operate the 3 million tonnes per annum facility. NSL was listed on the BSE in February 2023.  “Now the go-ahead has to come from top whether the plant will be commissioned to run or privatised,” the official said.

The stake sale in SCI, too, should be completed this year, for which the financial bids need to be called for. But here again, it will be a political decision, the official said.

One of the issues that held up the disinvestment was the listing of its non-core arm, Shipping Corporation of India Land and Assets Limited (SCILAL). A major sticking point was removed when the Maharashtra cabinet waived stamp duty on the sale of Shipping House, its headquarters. With SCILAL fully demerged and having been listed on March 19, the decks have been cleared at least on this front for SCI's strategic sale.

“It is not easy to privatise in Modi 3.0 because of strong opposition and being a coalition government,” the official pointed out.

Projects & Development India Ltd and HLL Lifecare are some of the smaller companies up for strategic sale and which are also at an advanced stage as the financial bids have already been invited, he added. However, a stake sale in BEML Limited is delayed due to unresolved land issues with the states.

Disinvestments in FY25 will not have a specific target laid out in the budget. There is likely to be an estimate of Rs 50,000 crore under non-debt capital receipts, including combined estimates of asset monetisation, disinvestment, etc. On the other hand, PSU dividends are given under a separate head, under non-tax revenue receipts.

The NSL scrip was down 1.83 percent at Rs 56.71 at 11.37 am on July 10. SCI was down over 2 percent at Rs 262.85 per share while BEML was down by 1.40 percent at Rs 4899.55.