The government has approved outright sale of state-owned SAIL’s three special steel units, including Salem and Alloy Steel plants. In pursuance of the decision, SAIL has now sought advisors, including legal and merchant bankers, to carry out the strategic sale along with transfer of management control in the three steel plants — Alloy Steels Plant (ASP), Salem Steel Plant (SSP) and Visvesvaraya Iron and Steel Plant (VISP).
“The government of India has ‘in-principle’ decided for strategic disinvestment of ASP, SSP and VISP of Steel Authority of India Ltd with transfer of management control,” SAIL said in the request for proposal (RFP) for appointing advisors. The Maharatna PSU is scouting for transaction advisor from professional consulting firm, investment bankers, financial institutions, to provide advisory services and manage the disinvestment process.
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The transaction advisor will advise SAIL on the modalities and timing of the strategic disinvestment of the three steel plans and prepare a detailed operational scheme to successfully implement the process, indicating tentative timelines for each activity. The firm will also finalise the process of strategic sale as to whether it will be done through bidding or auction and assist SAIL in fixing the range of the fair reserve price considering the valuation of the divesting plants.
The reserve price will be based on valuation methods like discounted cash flow, relative valuation, and asset based valuation. Along with the report of asset value, it will highlight the pros and cons of adopting these methods of valuation. The strategic sale of these three units is likely to happen only in the next financial year beginning April. The government has budgeted to raise Rs 15,000 crore from strategic disinvestment in 2017-18.
ASP is located at Durgapur in West Bengal spread over around 467.22 hectares. It has a diverse product portfolio of over 400 grades catering to end-use by strategic sectors like defence, railways, automobiles, power plants, heavy engineering and manufacturing industries. SSP in Tamil Nadu can produce stainless steel in the form of coils and sheets with an installed capacity of 70,000 tonnes a year in cold rolling mill and 3.64 lakh tonnes a year in hot rolling mill.
Located in Bhadravati, Karnataka, VISP produces high quality alloy and special steels and pig iron. The unit has an installed capacity of 2.16 lakh tonnes of hot metal and 98,280 tonnes of alloy and special steels.