Team News Riveting
New Delhi, October 14
The Cabinet Committee on Economic Affairs chaired by the Prime Minister Narendra Modi had given its ‘in-principle’ approval to the demerger of Nagarnar Steel Plant (NSP) from National Minerals Development Corporation (NMDC) Ltd.
It also approved strategic disinvestment of the demerged company (NSP) by selling the entire Government of India stake in it to a strategic buyer.
NSP is a three million tonne per annum (mta) Integrated Steel Plant being set up by NMDC at Nagarnar, Bastar District, Chhattisgarh in an area of 1980 acres at revised estimated cost of Rs 23,140 crore (as on 14.07.2020). As on date NMDC has invested Rs 17,186 crore on the project out of which Rs 16,662 crore is from NMDC’s own funds and Rs 524 crore has been raised from bond market.
With the approval, CCEA has amended its earlier decision taken on October 27, 2016, to disinvest Nagarnar Steel Plant as a unit of NMDC.
The proposal to demerge the NSP into a separate company before its disinvestment would have advantages that include NMDC could now focus on its core activities of mining while the NSP and NMDC should be accountable for their respective operations and financial performance. Shareholders of NMDC will also be shareholders of the demerged company (NSP) in the proportion of their shareholding.
After the demerger, investors will have better visibility of the operations and cash flow of NMDC and NSP separately. The demerger will also be tax neutral from the point of view of capital gains.
The CCEA has taken note that the process of demerger and disinvestment will be initiated in parallel and disinvestment of the demerged company (NSP) is expected to be completed by September 2021.
