The steel ministry has appointed the transaction advisor for strategic sale of FSNL, along with three units of Steel Authority of India Ltd (SAIL) and NMDC Ltd‘s Nagarnar steel plant
The government has initiated the process to divest its entire stake in Ferro Nigam Scrap Ltd (FSNL) through strategic sale, a move that would bring the Centre closer to its ambitious disinvestment target of Rs 72,500 crore for the next financial year 2017-18.
FSNL is a subsidiary of MSTC Ltd, which falls under the administrative control of the steel ministry.
The steel ministry has appointed the transaction advisor for strategic sale of FSNL, along with three units of Steel Authority of India Ltd (SAIL) and NMDC Ltd’s Nagarnar steel plant, a senior government official told Moneycontrol.
However, the official said that the sale is unlikely to materialise in the current financial year (2016-17).
“These things take time. The valuation of these units will be done, which would then require the Cabinet’s approval. A two-stage bidding process for sale would follow thereafter,” the official said.
Later, the Centre may instruct the state-owned company buy back government shares for an amount equivalent to the value realised from the sale. Alternatively, it may ask the company to issue special dividend, the official added.
Last year, the Cabinet had given in-principle nod for strategic sale of three loss-making units of SAIL—Salem steel plant in Tamil Nadi, Ferro Alloy plant in Durgapur and Visvesvaraya iron and steel plant at Badrawati.
The Cabinet had also approved selling off country’s largest iron ore miner NMDC’s Nagarnar steel unit that was aimed to be commissioned in December, 2016.
Last week Finance Minister Arun Jaitley said that the government has budgeted a disinvestment target of Rs 72,500 crore in 2017-18, including Rs 15,000 crore from strategic disinvestment.
Senior officials from steel ministry has met the principal secretary to the Prime Minister Narendra Modi to discuss issues related to the strategic sale. In addition, the finance ministry has asked steel ministry to stick to the timeline of 180 days for the completion of the process of stake sale, the official said.
The Department of Investment and Public Asset Management (DIPAM) has so far realised about Rs 31,000 crore of disinvestment revenues. Earning extra revenues through state-controlled companies’ dividends and selling equity in such companies is critical for next year’s central Budget math.