Thursday, August 11, 2022

Cabinet approves strategic disinvestment of NMDC’s Nagarnar Steel Plant

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  • The process of demerger and disinvestment will be initiated in parallel and disinvestment of NSP is expected to be completed by September 2021

  • NSP is a 3-million-tonne-per-annum (MTPA) Integrated Steel Plant being set up by NMDC at Nagarnar, Bastar district

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) has given its ‘in-principle’ approval to the demerger of Nagarnar Steel Plant (NSP) from NMDC Ltd. and the strategic disinvestment of the demerged company (NSP) by selling the entire stake of the government to a strategic buyer, an official statement said on Wednesday. With the approval, the CCEA has amended its earlier decision taken on October 27, 2016, to disinvest Nagarnar Steel Plant as a unit of NMDC.

NSP is a 3-million-tonne-per-annum (MTPA) Integrated Steel Plant being set up by NMDC at Nagarnar, Bastar district, Chhattisgarh, in an area of 1,980 acres at revised estimated cost of Rs 23,140 crore (as on July 14). 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 the bond market.

Demerger will give investors better visibility of operations

“With demerger, NMDC can focus on its core activities of mining, and NSP shall be a separate company and the managements of NMDC and NSP shall 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 statement said.

ALSO READ: NMDC offers employment to NINL staff on deputation basis at its Nagarnar plant

The CCEA has taken note that the process of demerger and disinvestment will be initiated in parallel and disinvestment of demerged company (NSP) is expected to be completed by September 2021.

NMDC is a listed CPSE under the Ministry of Steel and government has 69.65 percent shareholding in the company.

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