Moneycontrol BureauThe government has begun the process of strategic sale of assets in public sector undertakings that includes three units of Steel Authority of India (SAIL), one unit of National Minerals Development Corporation (NMDC) and Ferro Scrap Nigam Ltd (FSNL).
Listing of MSTC is also on the cards. MSTC Limited is a Mini Ratna Category-I PSU under the administrative control of the Ministry of Steel, Government of India that conducts a variety of auctions, reports Business Standard.
Officials told Business Standard that transaction advisors were being appointed and the sales were likely to materialise in 2017-18.
For the sale of assets that do not operate as companies, the parent company would first spin them off as 100 percent subsidiaries, said a source privy to the developments.
With the proceeds from the sale of equity in subsidiaries going to the parent public sector undertaking, the government would likely seek buyback in them. The PSU would be asked to buyback government shares for an amount equivalent to the value realised from disinvestment in the subsidiary.
The three units of SAIL - Salem stainless steel plant in Tamil Nadu, Visvesvaraya Iron and Steel at Bhadravathi in Karnataka and the Durgapur alloy steel plant in West Bengal make a combined loss of Rs 600 crore annually, which is expected to decline to Rs 450 crore in the current fiscal.
For NMDC, the Cabinet Committee on Economic Affairs (CCEA) had approved the divestment of the Nagarnar steel plant. According to CCEA, the sales would take place through a two-state auction, involving technical and financial bids.
“This announcement of strategic disinvestment means a minimum of 51 percent. So it depends on efficiency and it is subject to many things. It is in the initial stages. There are still a lot of processes to undergo,” said steel secretary Aruna Sharma.
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