Here’s why the government may be planning to invite bids in efforts to privatize NMDC Steel

The government is likely to invite bids after making operational the plant in Chhattisgarh to increase NDMC’S value.

In its latest move in the privatizing spree, the government is planning to invite bids for NMDC Steel. The formal announcement is likely to be made once the blast furnace located in Chhattisgarh has been commissioned. This would enhance the value of NMDC and build investor confidence.

The government holds a 60.79% stake in NMDC Steel Ltd (NSL). In 2022, NSL was demerged from NMDC. NMDC is the largest iron ore producer in India. The remaining 39.21% stake belongs to the general public.  NMDC is believed to have a production capacity of 3 million tons per year.

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How Much Will the Dermerger Fetch?

The government is planning to sell a 50.79% stake. NMDC Steel is currently listed on the stock exchange. It is trading at around  44 a share. At this price, this demerger is likely to fetch the government around 6,500 crore.

Another noteworthy fact is that the government has set a disinvestment target of 51,000 crore. So far the government has sold minority stakes in various Public Sector undertakings and has realized 4,235 crores.

It was in October 2020 that CCEA gave its approval for the demerger of the Nagarnar steel manufacturing unit from NMDC. Approval was also given for the strategic disinvesting of the resulting entity.