Tata Steel Long Products
(TSLP) had in January emerged as the winning bidder, putting in bids worth Rs
12,100 crore for loss-making NINL, which is a joint venture of 4 CPSEs -- MMTC,
NMDC, BHEL, MECON and 2 Odisha government PSUs -- OMC and IPICOL.
Following
that, in March TSLP signed a share purchase agreement with NINL.
"The transaction is in
concluding stage and the handover should take place by the middle of next
month," an official told PTI.
TSLP's bid was more than
double the reserve or base price of Rs 5,616.97 crore for NINL.
Since the government does
not hold any equity in the company, the sale proceeds would not accrue to the
exchequer and would instead go to the 4 CPSEs and 2 Odisha government PSUs.
NINL's 1.1 million tonne a
year capacity steel plant at Kalinganagar in Odisha was shut in March 2020 due
to continued losses.
Once completed, NINL would
be the second successful privatisation by the current government. Incidentally,
Air India -- the first company in privatisation list -- too was bought by Tata
Group. It bid for Rs 18,000 crore for Air India, higher than the reserve price
of Rs 12,100 crore.
The NINL transaction is on a
"going concern" basis and the employees of NINL will continue to be
the employees of the company in terms of the Share Purchase Agreement (SPA),
which binds the buyer to have a lock-in period of one year. The strategic buyer
will also be bound to follow the terms of VRS applicable to CPSEs whenever such
a decision is taken.
NINL has huge debt and
liabilities exceeding Rs 6,600 crore as on March 31, 2021, including huge
overdue of promoters (Rs 4,116 crore), banks (Rs 1,741 crore), other creditors
and employees.
The company has a negative
net worth of Rs 3,487 crore and accumulated losses of Rs 4,228 crore as of
March 31, 2021. This is the first instance of privatisation of a public sector
steel manufacturing enterprise in India.
The Cabinet had in January
2020 given an 'in-principle' approval for strategic disinvestment of NINL, and
authorised Department of Disinvestment & Public Asset Management (DIPAM) to
undertake the transaction. Following this, Expressions of Interest (EoIs) were
invited on January 25, 2021, and multiple EoIs were received by the due date of
March 29, 2021.