In what could be the first privatisation transaction in over two years, the Centre on Thursday approved the sale of MSTC subsidiary Ferro Scrap Nigam Limited (FSNL), along with transfer of management control, to Konoike Transport Co. Ltd., a Japanese firm, for ₹320 crore.
FSNL, a 100% subsidiary of MSTC Ltd. under the Ministry of Steel (MoS), was incorporated in 1979 to provide steel mill services, and specialises in the recovery and processing of scrap from slag and refuge generated during iron and steel production.
The Cabinet Committee on Economic Affairs (CCEA) had granted an ‘in-principle’ approval for strategic disinvestment of MSTC’s entire stake in FSNL in October 2016. The Alternative Mechanism, a ministerial group empowered by the CCEA, approved the highest bid for FSNL of ₹320 crore from Konoike Transport, which is listed on the Tokyo Stock Exchange.
“Konoike’s steel division is a long-established segment of the company, with over 140 years of experience in steelworks operations,” the Finance Ministry said in a statement about the approval granted by the panel comprising Road Transport and Highways Minister Nitin Gadkari, Finance Minister Nirmala Sitharaman, and Steel Minister H. D. Kumaraswamy.
“The transaction now moves to concluding stage. The next steps include issuing the Letter of Award, signing the Share Purchase Agreement (SPA), fulfilling the conditions precedent as specified in the SPA by respective parties, and closing the transaction,” the Ministry said.
In January this year, a plan to divest the Salem Steel Plant, a unit of SAIL, was scrapped, while the privatisation of Central Electronics and Pawan Hans had to be junked after being announced, owing to legal concerns about the winning bidders. After Air India’s sale to the Tata Group, the last successful strategic sale of a public sector unit was that of Neelachal Ispat Nigam Ltd. (NINL) to a Tata group firm, concluded in 2022-23.
Published – September 19, 2024 07:59 pm IST
