The government is likely to invite financial bids for privatising NMDC Steel only after the commissioning of the blast furnace at the company's steel plant in Chhattisgarh, according to officials.
Officials expect the value of the company to go up once the blast furnace of the steel plant becomes operational. NSL is expected to have a production capacity of 3 million tonnes per annum. The government holds a 60.79 per cent stake in NMDC Steel Ltd (NSL) after it got demerged from NMDC, which is India's largest iron ore producer.
The facility is located in Nagarnar, Chhattisgarh. The remaining 39.21 per cent stake is with the public.
NSL is up for privatisation with the government looking to sell 50.79 per cent of its shareholding, along with management control. The government had received multiple preliminary bids or expressions of interest for the company.
Officials said the government will get to know the fair value of NSL once the blast furnace, which is the heart of a steel plant, is commissioned and production starts.
Financial bids would be invited only after investors gain confidence about the real capacity of the company.
NMDC Steel, which was listed on the stock exchanges in February this year at Rs 30.25, is currently trading at around Rs 44 a share. Based on the current market price, the sale of a 50.79 per cent stake would fetch the government around Rs 6,500 crore.
In October 2020, the CCEA gave 'in-principle' approval to the demerger of the Nagarnar steel manufacturing unit from NMDC and strategic disinvestment of the resulting entity by selling the entire stake of the Government of India.
Following that the government on December 1, 2022, invited bids for buying a 50.79 per cent stake in NSL. The balance 10 per cent stake of the government would be offered to NMDC after the strategic buyer for 50.79 per cent stake is selected.
The privatisation of NSL is expected to be completed in the current fiscal. The Budgeted disinvestment target for the current fiscal is Rs 51,000 crore, of which the Government has so far raised Rs 4,235 crore from minority stake sale in PSUs.
