New Delhi: The government on Wednesday approved demerger of the under-construction Nagarnar steel plant (NSP) from NMDC, and its strategic disinvestment by selling the entire stake of the Centre to a strategic buyer. State-owned NMDC, under the Ministry of Steel, is constructing the steel plant at Nagarnar in Chhattisgarh.
"The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has given its in-principle approval to the demerger of Nagarnar Steel Plant (NSP) from NMDC and strategic disinvestment of the demerged company (NSP) by selling entire Government of India stake in it to a strategic buyer," an official statement said. The CCEA has taken note that the process of demerger and disinvestment will be initiated in parallel and disinvestment of the demerged company (NSP) is expected to be completed by September 2021, it said.
With the demerger, the statement said, NMDC can focus on its core activities of mining. NSP shall be a separate company and the managements of NMDC and NSP shall be accountable for their respective operations and financial performance. "Shareholders of NMDC will also be shareholders of the demerged company (NSP) in the proportion of their shareholding. The investors will have better visibility of the operations and cash flow of NMDC and NSP separately," it said.
The demerger will also be tax neutral from the point of view of capital gains, it added. NSP is a 3 million tonne per annum (mtpa) integrated steel plant being set up by NMDC in Nagarnar over an area of 1,980 acres at a revised estimated cost of Rs 23,140 crore.
As on date, NMDC has invested Rs 17,186 crore on the project, out of which Rs 16,662 crore is from NMDC's own funds and Rs 524 crore has been raised from the bond market, it said. NMDC is a listed central public sector enterprise in which the Government of India has 69.65 per cent shareholding.