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The Ministry of Corporate Affairs (MCA) has approved the demerger of NMDC Steel from NMDC Ltd, the state-owned iron-ore miner.
The yet-to-be commissioned 3 million tonne per annum (MTPA) steel plant, at Nagarnar in Chhattisgarh, has been built at an investment of Rs 20,000 crore.
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NMDC in advanced talks for demerger of steel unit
Demerger expected to be completed by Q2FY23The MCA order, issued on October 6, was received by NMDC on Tuesday (0ctober 11).
“The sanction of the Central Government is hereby accorded to the Scheme of Arrangement of NMDC Ltd (Demerged Company) and NMDC Steel (Resulting Company). The scheme shall be binding on the shareholders and creditors of the demerged company and resulting company and all concerned with effect from April 1 , 2021,” the MCA order said.
NMDC, in a stock market notification said, it was in the process of complying with the requirements “as envisaged in the MCA order”.
Assets worth Rs 18,650 crore and liabilities worth Rs 1,602 crore will be demerged to NMDC Steel.
In October 2020, the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi gave its “in-principle” approval to the demerger of the steel plant from NMDC Ltd, and the strategic disinvestment of the steel unit by selling the “entire stake” of the Centre “to a strategic buyer”.
The Centre’s stake in NMDC and the now demerged steel unit stands at 60.79 per cent.
Shareholders will be issued shares in the ratio 1:1, that is, every shareholder holding one share of NMDC Ltd will get a similar number of shares of NMDC Steel.
Corporate governance requirements for listing of NMDC Steel plant include constitution of a Board of Directors with a “minimum of six directors” (three non-executive and executive directors each) and four committees – audit, nomination and remuneration, stakeholders’ relationship and risk management.
Steel plant commissioning
According to an inter-ministerial group meeting held last month, the revised date for commissioning the steel plant has been fixed around March 2023.
According to NMDC officials, the commissioning of the first coke pushing is expected in October, while the roll-out of the first hot rolled coil is likely in March 2023.
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