
The Alternative Mechanism, empowered by the Cabinet Committee on Economic Affairs (CCEA), has approved the highest bid of Rs. 320 crore from Konoike Transport Co. Ltd. for the sale of 100% equity shareholding of MSTC Ltd in Ferro Scrap Nigam Limited (FSNL) along with the transfer of management control. The decision was made by a committee comprising Union Minister for Road Transport and Highways Nitin Gadkari, Union Finance Minister Nirmala Sitharaman, and Union Minister of Steel H. D. Kumaraswamy.
FSNL, a 100% subsidiary of MSTC Ltd under the Ministry of Steel, was incorporated on March 28, 1979, to provide steel mill services, specializing in the recovery and processing of scrap from slag and refuse generated during iron and steel making across various steel plants.
The CCEA granted ‘in-principle’ approval for the strategic disinvestment of the entire equity shareholding of MSTC Ltd in FSNL in October 2016. The strategic buyer was identified through a two-stage auction process. Following a competitive bidding process, professional advisers, including a Transaction Adviser, Legal Adviser, and Asset Valuer, were appointed. A Preliminary Information Memorandum (PIM) inviting Expressions of Interest (EoI) from prospective bidders was issued on March 31, 2022, with the submission deadline initially set for May 5, 2022, and later extended to June 17, 2022. Six interested bidders expressed their interest, and five were shortlisted as qualified bidders.
The Qualified Interested Bidders (QIBs) conducted due diligence on the company, and security clearance was obtained from the Ministry of Home Affairs for four QIBs. The Request for Proposal (RFP) and Share Purchase Agreement (SPA) containing terms and conditions were issued on January 2, 2024, inviting financial bids. Two sealed financial bids were received by the due date of January 31, 2024.
Following the receipt of sealed financial bids, the reserve price for the transaction was independently fixed at Rs. 262 crore based on valuations carried out by experts. The two technically qualified financial bids were then opened in the presence of the bidders’ representatives. The bid submitted by Konoike Transport Co. Ltd. at Rs. 320 crore was the highest and above the reserve price. The other bid was from Indic Geo Resources Pvt. Ltd., a subsidiary of Chandan Steel Ltd.
The approval marks a significant step in the strategic disinvestment process, aiming to enhance efficiency and bring in private sector participation in the management of FSNL.