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Shareholders and creditors of NMDC Ltd, the country’s largest iron ore miner, have approved the demerger of the company’s yet to be commissioned steel plant at Nagarnar. The steel unit will be demerged and subsequently listed as NMDC Steel Ltd.
The demerger approval also paves way for a probable future sale of the steel plant.
“Shareholders and creditors of NMDC have already approved the demerger of the steel plant,” Sumit Deb, Chairman and Managing Director, NMDC Ltd, told BusinessLine.
The Union Steel Ministry had convened two separate meetings – one with the creditors (whose debt is of a value of over ₹1 crore as on September 30, 2021) and another with shareholders – for approval of the demerger proposal.
NMDC Ltd reportedly will issue shares in the ratio of 1:1 for NMDC Steel Ltd. The listing process is supposed to take a few more months, post the June 28 meeting. The iron-ore miner’s board had earlier approved the “scheme of arrangement for de-merger” between NMDC and NMDC Steel Ltd, according to a regulatory filing.
The lenders and shareholders meeting was previously scheduled on June 7, but had to be postponed due to the lack of a quorum among the equity shareholders.
The iron-ore miner had a consolidated debt of ₹3,500 crore as on March, a part of which will be hived off to the steel company.
In 2019, the NMDC board had approved raising ₹5,000 crore as capital expenditure for the steel plant. Of this, a rupee term loan of ₹4,476 crore was raised from State Bank of India for part funding of the steel plant. The company has already drawn ₹1,144 crore from this facility and these loans will be transferred to the new owner.
Nagarnar commissioning
Meanwhile, sources say, commissioning of the 3 million tonne per annum Nagarnar steel plant has been pushed back “probably to September” . A breakdown at the site – burning down of motor made by BHEL at the oxygen plant – is seen as a cause of delay.
The company is reportedly looking at ancillary means to make the plant operational.
Post the Q4FY22 earnings call, NMDC’s Director Finance, Amitava Mukherkee, said the company was heating the cocoon for 3 months – as a part of the commissioning process- and core consignments have already arrived at Nagarnar. “We (were) ready for coke pushing, but unfortunately, a major breakdown happened in the oxygen plant,” he had said.
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