SCI, NMDC Steel disinvestment may proceed post election

24 May 2024 , 12:59 PM

The disinvestment of the state-run Shipping Corporation of India (SCI) and NMDC Steel may get impetus after the general election in early June, according to sources.

The government is finalising the board composition of Shipping Corporation of India Land and Assets Ltd (SCILAL), which was formed by spinning off SCI’s non-core real estate assets, in order to meet regulatory requirements for the entity’s IPO.

The Centre will seek financial offers for its whole 63.75% holding in SCI shortly after the demerged firm, SCILAL, is listed. While SCILAL will remain government-owned, SCI’s core assets will be privatised.

Last year, the Maharashtra government waived the stamp duty associated with the demerger of SCILAL in response to the Centre’s request. Industry estimates show that the stamp duty exceeded ₹250 Crore. With this, the government had reached a critical milestone in its efforts to get SCILAL listed. According to the sources, these (the privatisation of SCI and NMDC Steel) will be pushed vigorously following the elections.

Reports also suggested that the listing of SCILAL will assist in setting up the reserve price of SCI because the shipping company’s existing stock valuation includes both core and non-core assets. The government owns a 63.75% stake in SCI, valued at around ₹7,800 Crore based on the company’s current stock price.

Shortly after the elections, the government will invite financial offers for a 50.79% interest in NMDC Steel. It previously planned to accelerate the sell-off process after launching its 3 million tonnes per year steel factory at Nagarnar in Chhattisgarh in August last year. The government intended to disinvest in the steel-making portion (NMDC Steel) rather than the mining portion (NMDC). This resulted in the separation of NMDC and NMDC Steel in 2022, followed by the solicitation of preliminary bids for the steel company.

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