Tata Steel arm bags majority govt stake in NINL for Rs 12,100 cr

03 Feb 2022 CW Team

Tata Group in their second acquisition of a public sector undertaking (PSU) in the same week bagged a major stake in the Neelachal Ispat Nigam (NINL).The deal gives a boost to the privatisation drive of the government. It further showcases the private sector investors’ interest in the Centre’s assets.

The divestment of the 93.7% stake in NINL was approved by an Alternate Mechanism that had Union Ministers Nitin Gadkari, Nirmala Sitharaman, and Piyush Goyal. The stake was handed over to Tata Steel Long Products (TSLP) for Rs 12,100 crore.

Rs 5,616.97 crore was the reserve price that had been set and approved by the Cabinet Secretary-headed Core Group of Secretaries on Divestment for the PSU. Two other bidders had also submitted their bids which include JSW Steel and consortium of Jindal Steel and Power and Nalwa Steel and Power. The Tata Group arm beat both these bidders.

There won’t be any divestment receipts for this exchequer after the sale because the Centre does not own any direct stake in the NINL.

Tata Steel has a 74.91% stake in Tata Steel Long Products.The buyer has to pay 10% of the bidding amount that will later be deposited in an escrow account. The previous clause of depositing 100% of the bid amount on the execution date was amended by the government on the basis of bidders’ demand.

On the transaction's closure date, the shares will be handed over to the new buyer and the remaining will be used in alignment with the waterfall agreement which was signed amongst the selling shareholders.

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