The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi has given its ‘in-principle’ approval to the demerger of Nagarnar Steel Plant (NSP) from National Minerals Development Corporation (NMDC) Ltd. and strategic disinvestment of the demerged company (NSP) by selling entire Government of India stake in it to a strategic buyer.

NSP is a three million ton per annum (mta) Integrated Steel Plant being set up by NMDC at Nagarnar, Bastar District, Chhattisgarh in an area of 1980 acres at revised estimated cost of ₹ 23,140 crore (as on 14.07.2020). As on date NMDC has invested ₹ 17,186 Crore on the project out of which ₹ 16,662 crore is from NMDC's own funds and ₹ 524 crore has been raised from bond market.

With the approval, CCEA has amended its earlier decision taken on 27^th October, 2016, to disinvest Nagarnar Steel Plant as a unit of NMDC.

The proposal to demerge the NSP into a separate company before its disinvestment has the following advantages:

 

(i) With demerger, NMDC can focus on its core activities ofmining;

(ii) After demerger, NSP shall be a separate company and the managements 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.

(iii) After the demerger, investors will have better visibility of the operations and cash flow of NMDC and NSP separately.

(iv) The demerger will also be tax neutral from the point of view of capital gains.

The CCEA has taken note that the process of demerger and disinvestment will be initiated in parallel and disinvestment of demerged company (NSP) is expected to be completed by September 2021.

NMDC is a listed CPSE under the Ministry of Steel and Government of India has 69.65 % shareholding in the Company.

Demerger and strategic disinvestment approved to separate operations and enable sale of government stake to a strategic buyer. Cabinet granted in-principle approval for the demerger of Nagarnar Steel Plant from NMDC and for strategic disinvestment of the demerged company by selling the Government's entire stake to a strategic buyer. The demerger precedes and runs in parallel with the disinvestment, aiming to allow NMDC to focus on mining, create separate management accountability and clearer financial visibility, and enable existing NMDC shareholders to hold proportional shares in the demerged entity; the transaction is described as tax neutral for capital gains.