- The CCEA had given its ‘in-principle’ approval on October 14, 2020, to the demerger of Nagarnar Steel Plant from NMDC Ltd and its strategic disinvestment
- According to NMDC Vision 2025, the PSU’s role is slated to be that of a developer for steel plants which will invite investors to commission and operate the plants at a suitable time
New Delhi: The Board of Directors of NMDC Ltd has approved the demerger of its steel business — NMDC Steel Limited — from the company, thereby paving the way for the de-merger of Nagarnar Steel Plant from NMDC. The Cabinet Committee on Economic Affairs (CCEA) had given its ‘in-principle’ approval on October 14, 2020, 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.
In a regulatory filing to the stock exchanges on Tuesday, NMDC said, “This is to inform you that the Board of Directors of NMDC Limited, at its meeting held today, July 13, 2021, has approved the Scheme of Arrangement for Demerger between NMDC Limited (" Demerged Company") and NMDC Steel Limited ("Resulting Company") and their respective shareholders, pursuant to Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (hereinafter referred to as the "Scheme").” It added that the de-merger is subject to statutory and regulatory approvals.
Nagarnar Steel Plant
NMDC Steel Limited is a wholly-owned subsidiary of NMDC Limited. The company currently does not have any business operations as it has been involved in setting up the 3-million-tonne-per-annum (MTPA) Nagarnar Integrated Steel Plant at Nagarnar, Bastar district, Chhattisgarh. The plant is being set up in an area of 1,980 acres at a revised estimated cost of Rs 23,140 crore (as on July 14, 2020).
“"Demerged Undertaking'' is defined under the Scheme to means the business of NMDC Iron & Steel Plant at Naganar (''NISP"), Chhattisgarh, including without limitation, the assets and liabilities described in Schedule I annexed to the Scheme on a going concern basis. NISP is being constructed by the Demerged Company as part of its expansion and value addition to act as a facilitator and developer for the steel plant,” said NMDC.
“The Demerged Undertaking would be vested with NMDC Steel Limited pursuant to the demerger. The entire share capital of the NMDC Steel Limited held by the NMDC Limited would be cancelled and new equity shares of NMDC Steel Limited (in a manner as elucidated in the Scheme) would be issued to all the shareholders of NMDC Limited in the same proportion,” the document said.
After de-merger, NMDC will seek investors for Nagarnar Steel Plant
While stating that according to NMDC Vision 2025, the PSU’s role is slated to be that of a developer for steel plants, which will invite investors to commission and operate the plants at a suitable time, NMDC said in the filing, “NMDC is therefore considering proposed scheme to add more value to Company’s stakeholders by demerging NISP into a separate company and subsequently inviting an investor.”
In an official statement released in October 2020, the government had said that the process of demerger and disinvestment will be initiated in parallel and disinvestment of demerged company (Nagarnar Steel Plant) 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.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)