The Indian government has approved the demerger of Nagarnar Steel Plant (NSP) from the National Mineral Development Corporation (NMDC) ltd. and strategic disinvestment of the demerged company by selling government’s entire stake. The decision was approved by Cabinet Committee on Economic Affairs (CCEA), as per recent press release.
Nagarnar Steel Plant is an under-construction integrated plant at NMDC at Nagarnar (Bastar District) in Chhattisgarh covering an area of 1,980acres at revised estimated costs of Rs231.4bn as of July 14, 2020.
As on date, NMDC has invested Rs171.86bn on the project of which Rs524bn were raised through bonds.
With this approval, CCEA has amended its decision taken on October 27, 2016 to disinvest Nagarnar Steel Plant as a unit of NMDC.
The proposal to demerge the NSP into a separate company before its disinvestment will allow NMDC to focus on its core activities of mining. Post demerger, Nagarnar Steel Plant and NMDC shall be separate entity and the managements of the entities shall be accountable for their respective operations and financial performance. Investors will have better visibility of the operations and cash flow of NMDC and NSP separately.
The CCEA has noted that the process of demerger and disinvestment will be initiated in parallel and disinvestment of NSP is expected to be completed by September 2021.
On 27 August, NMDC board had approved the proposal to demerge its NMDC Iron and Steel plant (NISP) at Nagarnar green field project which is expected to be commissioned by next year.