Tata Group on its way to privatize second loss-making PSU - Neelachal Ispat Nigam after Air India

The second addition in the PSU acquisitions by Tata Group post the Air India (the first PSU to be privatized in decades) is Neelachal Ispat Nigam Limited (NINL).

Tata Steel Long Products Limited (TSLPL) has emerged as the winner of the bidding process to acquire a 93.71% equity stake in the Odisha based Neelachal Ispat Nigam Limited for Rs 12,100 crore.

The acquired stake by the Tatas is held by four central PSUs (MMTC, NMDC, BHEL, MECON) and two Odisha Government Companies (OMC and IPICOL) which was offered to bid at a Reserve Price of Rs 5,616.97 crore. The Centre does not directly hold a stake in NINL.

Tata Steel Ltd holds a 74.91% stake in Tata Steel Long Products Ltd (TSLPL) formerly known as Tata Sponge Iron Limited) and is one of the largest speciality steel plants in India with an annual capacity of 1 million tons per annum.

As part of the larger Tata Steel ecosystem, the location of the NINL complex presents opportunities to leverage synergies with existing infrastructure, bring to bear best operating practices and expertise in mining as well as project management to create significant value.

An empowered cabinet committee (alternate mechanism) comprising of Union Minister Nitin Gadkari, Nirmala Sitharaman and Piyush Goel, has approved the bid of TSLPL to acquire a majority stake in NINL. The bid by Tatas beats the other two bidders, a consortium of Jindal Steel & Power and Nalwa Steel and Power, and JSW Steel.

 The company said that the acquisition was being financed through a combination of internal accruals and bridge loans which were expected to be paid down through the internal generation of Tata Steel over the next few quarters. 

The transaction is scheduled for closure within the next couple of months as per the process timelines announced by DIPAM, Government of India.

The NINL deal is the second successful privatization by the Modi Government which was also mentioned by the FM Sitharaman in her Budget Speech 2022.

The stock of Tata Steel Long Products closed with a loss of 3.89% at Rs 736 at the bourses today.