Approves Tata Steel’s Bid to Acquire 93.71% Equity in NINL

The Government on Monday has approved the highest bid of Tata Steel Long Products Limited for acquiring 93.71% equity in Neelachal Ispat Nigam Ltd (NINL), a joint venture of 4 CPSEs ─ MMTC, NMDC, BHEL, MECON, and 2 Odisha Government-owned companies ─ OMC and IPICOL. 

This is a combined decision of three Ministers ─ Transport Minister Nitin Gadkari, Finance Minister Nirmala Sitharaman, and Commerce & Industry Minister Piyush Goyal. Prior to this, the government does not hold any stake in NINL directly. Also, the company is running at a huge loss, and its plant was closed in April 2020. 

“The company has huge debt and liabilities, exceeding Rs. 6,600 crores till date 31 March 2021 including overdue of promoters, Rs. 4,116 crores, banks, Rs. 1,741 crores and other creditors and employees’ salaries. The company has a negative net worth of Rs. 3,487 crores and accumulated losses of Rs. 4,2287 crores”, the government said. 

Tata Steel Long Products Ltd. would be the highest bidder, defeating JSW Steel, a consortium of Jindal Steel & Power Ltd. and Nalwa Steel & Power Ltd. The reserved price for bid has been approved Rs. 5,616.97 crores, and the money raised through stake will go for funding company liabilities and to the selling shareholders. This way, the company will come out from the debt and liabilities.

This is the first instance of privatization of a public sector steel manufacturing enterprise in India. The success of the transaction is a win-win situation for all. The biggest advantages of privatization to the local economy of the country as the strategic buyers will be able to revive a closed plant, invite modern technology, best managerial practices, and make an infusion of fresh capital, which will help in augmenting the capacity of the plant”, the government said. 

In regard to this deal, the government will issue a Letter of Intent to Tata Steel Long Product and thereafter sign a share purchase agreement. The government had set up a virtual data room for the bidders to conduct due diligence.

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