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CCEA okays demerger of Nagarnar Steel Plant from NMDC and strategic disinvestment of demerged entity
New Delhi, October 15, 2020
The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its "in-principle" approval to the demerger of Nagarnar Steel Plant (NSP) from the public sector National Minerals Development Corporation (NMDC) Ltd.
It also approved the strategic disinvestment of the demerged company (NSP) by selling the entire Government stake in it to a strategic buyer.
NSP is a three million tonne per annum (MTA) Integrated Steel Plant being set up by NMDC at Nagarnar, Bastar District, Chhattisgarh in an area of 1980 acres at a revised estimated cost of Rs 23,140 crore (as on June 14, 2020).
As on date, NMDC has invested Rs 17,186 crore on the project out of which Rs 16,662 crore is from its own funds and Rs 524 crore raised from the bond market.
With the approval, CCEA has amended its earlier decision taken on October 26, 2016, to disinvest Nagarnar Steel Plant as a unit of NMDC.
With demerger, NMDC can focus on its core activities of mining. After the demerger, NSP will be a separate company and the management 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. After the demerger, investors will have better visibility of the operations and cash flow of NMDC and NSP separately.
The demerger will also be tax neutral for capital gains.
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.
NMDC is a listed CPSE under the Ministry of Steel. The Union Government has a 69.65 % shareholding in the company.