New Delhi/Bhubaneswar: The Centre on Monday approved the sale of 93.7 per cent stake in Neelachal Ispat Nigam Limited (NINL) to Tata Steel Long Products, the highest bidder, at an enterprise value of Rs 12,100 crore.
The NINL, which has an integrated steel plant with a capacity of 1.1 MT, at Kalinganagar in Odisha, is a joint venture of 4 CPSEs, namely MMTC, NMDC, BHEL, MECON, and two Odisha government state PSEs, namely OMC and IPICOL. The MMTC has 49.78 per cent share, while the Odisha government has 32.47 per cent stake in NINL through IPICOL and OMC.
“Government of India does not hold any equity in the company. However, on the request of the Boards of selling shareholder PSEs and on concurrence by the Govt of Odisha, CCEA ‘in-principle’ approved strategic disinvestment of NINL on 8.1.2020, and authorised the Department of Disinvestment & Public Asset Management (DIPAM) to undertake the transaction,” said the Ministry of Finance in a statement.
In December 2021, the government had received financial bids for strategic bids for the Odisha-based company that produces iron and steel.
“The transaction was made through an open-market, competitive bidding process towards the enterprise value of the company, comprising the liabilities of the company as on 31.3.2021 and the 93.71% equity of the company held by the 6 selling PSE shareholders,” it added.
Notably, NINL had achieved net profit up to 2011-12. The company made losses from 2012-13 due to low equity infusion, insufficient cash flow, want of funds for repair, modernisation, expansion, inadequate supply of raw materials, high production cost and commission at a high rate to MMTC upon purchase and sell, Neelachal Executive Association (NEA) President Avijit Koley had earlier told the media.
In 2018-19, NINL took many positive steps towards revival and blast furnace capital repair increased productivity, while its captive mine got all clearances in 2019,
However, it has been closed since March 30, 2020, and has a huge debt and liabilities exceeding Rs 6,600 crore as of March 31, 2021, which includes overdues of promoters (Rs 4,116 crore), banks (Rs 1,741 crore), other creditors and employees.
With a negative net worth of Rs 3,487 crore, it has accumulated losses of Rs 4,228 crore as of March 31, 2021, the Business Standard reported.
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