In a bid to facilitate divestment of Salem Steel Plant, Steel Authority of India Ltd (SAIL) has reportedly agreed to “give up non-core land” to the Tamil Nadu government. In return, the state government will facilitate the divestment process, an internal note of the Ministry of Steel, reviewed by businessline, said.

SAIL will part with 1,600 acres of land “at market rate”, which is anticipated at ₹2,000 crore, and this land parcel is to be used by the Tamil Nadu government for its defence corridor.

Ministry officials, aware of the discussion, say of the total area of 3,900 acres, 1,700 acres falls under the company’s divestment plans. Some 1,600 acres will be transferred to the Tamil Nadu government, and SAIL will be left with 600-odd acres of non-core land still.

A meeting between the SAIL CMD and the Tamil Nadu Chief Secretary was reportedly scheduled in February. The note adds that the Tamil Nadu state government is “requesting” transfer of non-core land (of the Salem Steel Plant), which is not covered under the divestment process.

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Law and order Issues

According to the ministry’s note, the transaction advisor “could not arrange visits of the short-listed bidders due to law and order issues”. “DIPAM has taken up the matter with the Ministry of Home Affairs and Government of Tamil Nadu,” it reads.

Deadlines extended

The last date for submission of comments on definitive draft agreements was extended to July 8, 2022, whereas the last date for submission (physical) of non-financial bids and financial bids was extended to August 18, 2022.

The PSU steel-maker had appointed SBI Capital Markets as the transaction advisor; Saraf and Partners (formerly Luthra & Luthra Law Offices) as the legal advisor; Protocol Insurance Surveyors & Loss Assessors as Asset Valuer, and KPMG as the tax-cum-accounting consultant.

The Ministerial documents states: “Secretary Steel had a telephonic conversation with the Chief Secretary, Tamil Nadu over 1,600 acre land parcel of Salem plant. This 1,600 acre land will be used by Tamil Nadu government for defence corridor. SAIL is willing to part with this land parcel at market rate.”

Salem Steel Plant, a special steel unit, pioneered the supply of wider-width stainless steel sheets and coils in India. The plant can produce stainless steel in the form of coils AND sheets, with an installed capacity of 70,000 tonnes/year in a Cold Rolling Mill; and 3,64,000 tonnes/year in a Hot Rolling Mill. The steel melting shop can produce 1,80,000 tonnes of slabs per annum.

Divestment plans

The Union Cabinet had approved the divestment of Salem Steel Plant in October 2016. Bidding documents were issued to short-listed bidders on December 9, 2020.

Since then, SAIL has been trying to take up the issue of organising site visits for shortlisted bidders, for which it has approached the local police, district administration, and state government.

Documents available with the Ministry show that the SAIL CMD has spoken and sent letters on February 17, April 10 and October 28 (in 2021) requesting facilitation of site visits.