SCI, NMDC Steel at advanced stages of strategic sale, await nod from PMO

The government's disinvestment agenda remains active, albeit at an uneven pace, according to a senior official. Several public sector undertakings (PSUs) are nearing the final stages of strategic sale but are awaiting approval from higher political authorities, the official stated.

Although the government has opted not to set specific divestment targets for the budget, the Department of Investment and Public Asset Management (DIPAM) is aiming to advance strategic sales in companies such as Shipping Corporation of India (SCI) and NMDC Steel Limited (NSL).

“NMDC Steel's strategic sale is progressing well. Most of the work is complete; only financial bids need to be invited. It is a prime candidate for privatization. However, without approval from the Prime Minister's Office (PMO), no progress can be made. There is some uncertainty,” the official told Moneycontrol on condition of anonymity.

The NSL divestment faces significant political challenges. Workers’ unions have opposed the move. The company employs 5,887 people and holds assets worth Rs 36,929 crore.

Interestingly, Home Minister Amit Shah, during an October 19, 2023, election meeting in Chhattisgarh's Bastar region, stated that the Nagarnar steel plant would not be privatized. This is significant because the Nagarnar plant is integral to NSL, which was spun off from NMDC to operate the 3 million tonnes per annum facility. NSL was listed on the BSE in February 2023. “Now, we are awaiting top-level decisions on whether the plant will be commissioned or privatized,” the official said.

The stake sale in SCI is also expected to be completed this year, pending the calling of financial bids. However, this too will depend on political decisions, the official noted.

One issue delaying disinvestment was the listing of SCI's non-core arm, Shipping Corporation of India Land and Assets Limited (SCILAL). This obstacle was overcome when the Maharashtra cabinet waived stamp duty on the sale of Shipping House, its headquarters. With SCILAL now fully demerged and listed as of March 19, the path has cleared for SCI's strategic sale.

“It is challenging to privatize during Modi 3.0 due to strong opposition and the coalition government,” the official pointed out.

Projects & Development India Ltd and HLL Lifecare are among the smaller companies also up for strategic sale and are at an advanced stage, with financial bids already invited. However, a stake sale in BEML Limited is delayed due to unresolved land issues with the states.

Disinvestments for FY25 will not have a specific target outlined in the budget. Instead, an estimate of Rs 50,000 crore is expected under non-debt capital receipts, including asset monetization and disinvestment. PSU dividends are accounted for separately under non-tax revenue receipts.

As of July 10, the NSL scrip was down 1.83 percent at Rs 56.71 at 11:37 am. SCI fell over 2 percent to Rs 262.85 per share, while BEML declined by 1.40 percent to Rs 4,899.55.