New Delhi, Feb 25 Divestment of FSNL or Ferro Scrap Nigam Ltd – a 100 per cent subsidiary of MSTC Ltd – has “entered the second phase” and the share purchase agreement is under preparation, a report by the Ministry of Steel said. Due diligence by “short-listed bidders” is also being carried out.

However, the transaction advisor could not arrange site visits for shortlisted bidders “due to law and order issues by trade unions” the report, accessed by businessline, said.

“Inspection of Bhilai and Rourkela (two of its plants) done,” it said, while for Durgapur, Burnpur and Bokaro, physical visits are being carried out. The dates are being “kept a secret” to avoid unfortunate circumstances.

“The buyers are bent on physical inspection and are not agreeable to drone or virtual inspection,” the report further noted.

According to FSNL’s FY22 annual report, dispatch stood at 36.54 lakh tonnes of scrap for the last fiscal, while slag haulage was at 107.13 lakh tonnes (total 143.67 lakh tonne) – up 13 per cent-odd YoY.

Earnings stood at Rs 415 crore; with profit-after-tax being Rs 40 crore. Dividend declared was Rs 39.40 crore, which is 123.125 per cent of the paid-up capital. The company operated at 97.81 per cent capacity.

The Chairman, in his report said: “The Government of India has taken a decision to divest entire 100 per cent shareholding in FSNL and in this regard EOI was issued on March 31, 2022 by the transaction advisor and at present visits by prospective investors is being organised.”

FSNL – a profit-making min ratna company – .has nine steel plants in India, and specialises in the recovery and processing of scrap from slag and refuse generated during iron and steel making across various steel mills. It offers services for dig and haul of blast furnaces and steel melting shop slag, processing of mill rejects, etc.

Multiple EOIs

Incidentally, EoI (expression of interest) and PIM (preliminary information memorandum) were issued and bidders were shortlisted. In June 2022, the DIPAM Secretary had said it had received multiple EOIs for strategic divestment of the company.

The winning bidder will have to undertake obligations such as employee protection, business continuity, asset stripping, and lock-in of the shares, which would be specified at the RFP stage. The eligibility criterion for bidders included a mandatory networth of at least Rs 150 crore and a positive profit after tax (PAT) in at least two of the immediately preceding five financial years.

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