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Days after Tata Sons acquired Air India, another Tata Group entity, Tata Steel Long Products has been selected by the Centre as a strategic buyer for state-run Neelachal Ispat Nigam Ltd (NINL).
Tata Steel Long Products will be picking up a 93.71 per cent stake in the iron and steel-maker for an enterprise value of ₹12,100 crore.
A statement by the Union Finance Ministry said, the bid was approved by the Alternative Mechanism, comprising of Union ministers Nirmala Sitharaman, Piyush Goyal and Nitin Gadkari.
The panel has “approved the highest bid of M/s Tata Steel Long Products Limited for 93.71 per cent of shares of joint venture partners of four CPSEs and two Odisha government State PSEs at the bid enterprise value of ₹12,100 crore,” the statement said.
NINL has an integrated steel plant with a capacity of 1.1 million tonne at Kalinganagar in Odisha. It is a joint venture of four CPSEs – MMTC, NMDC, BHEL, MECON – and two PSUs of the Odisha government, namely OMC and IPICOL (32.47 per cent).
The iron and steel-maker had ran up losses and the plant had with been closed since March 2020. Its debt and liabilities exceeded ₹6,600 crore as on March 31, 2021 and this included overdue of promoters to the tune of ₹4,116 crore, banks (₹1,741 crore), and other creditors and employees. It had a negative net-worth of ₹3,487 crore and accumulated losses of ₹4,228 crore for FY21-end.
The transaction was made through an open-market, competitive bidding process towards the enterprise value of the company, comprising the liabilities of the company as on March 31, 2021 and the 93.71 per cent equity of the company held by the six selling PSE shareholders.
Other bidders
The Centre said it received three bids with the qualified bidders being a consortium of Jindal Steel & Power Limited and Nalwa Steel and Power Ltd; JSW Steel Limited and Tata Steel Long Products Limited (TSLP).
Tata Steel Long Products Limited (TSLP) emerged as H-1 bidder and a letter of intent (LoI) is being issued, the Ministry said in a statement adding that: “at this stage, 10 per cent of the bid amount shall be paid by the successful bidder into the Escrow account.”
Part of the sale proceeds would be infused in the company to the extent of the liabilities.
The transaction is on “going concern” basis and the staff of NINL will continue to work be the employees of the company in terms of the Share Purchase Agreement (SPA), which binds the buyer to have a lock-in period of one year, it added.
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