Stemcor India employees to take part in auction of company’s assets

Stemcor India employees backed by minority partner industrialist Sanjay Saraf will bid for the $800 million assets on block, unfazed by the British parent rejecting their earlier management buyout plan.

Sources said employees of Stemcor India are not disheartened by the earlier rejection and would now participate in the auction that is likely to take place by the middle of September.

Following a decision taken by the UK-based trading firm Stemcor in April, senior management of Stemcor India had asked the parent firm to consider selling the assets to a group led by 1,000-odd employees. The plan was to distribute the ownership among each one of the employees.

The minority shareholder of Stemcor India, Sanjay Saraf and family, who have the first right of refusal to the Stemcor India assets, had also lent support to employees, sources said.

However, the management buyout proposal was rejected and Stemcor management began discussions with potential buyers, including at least a dozen of Indian and overseas metal and mining firms, without any consultations with Stemcor India management.

A management buyout (MBO) is a form of acquisition where a company’s existing managers buy a large part or all of the company from either the parent or from private owners.

Sources said the idea of employees owning Stemcor India is to make it truly the first worker-owned Indian iron company and to create a sense of “ownership” and “entrepreneurship” among them.

“Employees had placed the offer to the UK-based management and quoted $800 million as the enterprise value for the assets of Stemcor India. They did not pay any attention and went on to inviting almost all India steel makers to buy the assets,” a company official said.

Asked whether the employees and the minority partner could muster up such a huge sum, he said the top management of the firm was in touch with some domestic private sector steel makers seeking a helping hand in lieu of some stake.

As a sweetner, the firms providing financial assistance would get guaranteed supply from the mine and pellet plant of Stemcor India.

Led by Matthew Stock, Stemcor India has the majority stake in Aryan Mining and Trading Corporation, which has 100 million tonnes of iron ore reserves with the licence to mine three million tonnes a year.

It also owns 10 per cent stake in Mideast Integrated Steel in Odisha. MISL has an iron ore mine that produces four million tonnes per year. Stemcor’s subsidiary, Brahmani River Pellets Ltd has a four million tonne per annum beneficiation plant at Barbil, Odisha, and a pellet plant complex at Jajpur.

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