Govt to invite bids for privatising NMDC after commissioning blast furnace

The government is likely to call for financial bids for the privatization of NMDC Steel only after the blast furnace at the company’s steel plant in Chhattisgarh has been commissioned, according to officials.

Officials expect the company’s value to rise once the steel plant’s blast furnace is operational. NSL’s production capacity is expected to be 3 million tons per year.

The government holds a 60.79 percent stake in NMDC Steel Ltd (NSL) after it was spun off from NMDC, India’s largest iron ore producer.

The facility is located at Nagarnar, Chhattisgarh. The remaining 39.21 percent share is with the public.

NSL is poised for privatization as the government looks to sell its 50.79 percent stake, along with management control. The government had received multiple initial bids or expressions of interest for the company.

Officials said the government will know the fair value of NSL once the blast furnace, the heart of the steel mill, is operational and production begins.

Financial bids will not be invited until investors have gained confidence about the true ability of the company.

NMDC Steel, which was listed on the stock exchanges in February this year at a price of Rs 30.25, is currently trading at around Rs 44 per share. Based on the current market price, the sale of a 50.79 per cent stake would bring the government around Rs 6,500 crore.

In October 2020, the CCEA gave approval “in principle” to spin off the Nagarnar steel manufacturing unit from NMDC and to strategically divest the resulting entity by selling the entire stake to the Government of India.

Then, on December 1, 2022, the government called for bids to buy 50.79 percent of NSL shares. The remaining 10 percent stake of the government will be offered to NMDC after the strategic buyer selects a 50.79 percent stake.

The privatization of the National Security Discourse is expected to be completed in the current fiscal year. The budgeted divestment target for the current financial year is Rs. 51,000 crore, of which the government has so far collected Rs. 4,235 crore from the sale of minority stakes in PSUs.