Panel for sale of MSTC, SIIL

With this, the commission, headed by G V Ramakrishna, has given its recommendations on 49 public sector undertakings (PSUs) for divesting government equity.

In the case of MSTC, formerly Metal Scrap Trading Corporation, the commission recommended sale of 100 per cent of government equity along with the corporation’s holding in Ferro Scrap Nigam Ltd (FSNL). FSNL is a 60:40 venture between MSTC and Harsco Corporation of USA.

The commission said MSTC had no "meaningful rationale" for continuing in scrap trading/disposal business as itcould be easily performed by the private sector.

It said in case there was no investor interest in the company, the company would have to be closed down and its assets and liabilities liquidated. The commission recommended disinvestment of 100 per cent of government equity in Sponge Iron India (SIIL) after writing off government loans and accumulated interest. SIIL is engaged in production of sponge iron, which is one of the primary inputs in making steel.

It said the cleaning up of the balance sheet of SIIL would result in better valuation of the company. In order to attract investor interest in the company, the commission also suggested a simultaneous move to reduce manpower through a voluntary retirement scheme (VRS).

In Mecon (Metallurgical and Engineering Consultants India Ltd), the commission suggested strategic sale of a minimum of 51 per cent equity stake along with appropriate role in management.

The commission said a strategic partner would be able to add to MECON’s stregth in terms oftechnical consultancy and lumsum turnkey (LSTK) capabilities and would help the company to enter non-steel and infrastructure sectors.

The selection of strategic partner should be done on the basis of global competitive bids and the company should simultaneously undertake reduction in manpower, the commission said. In the case of MECL, the commission said, the company should be allowed to continue their operations and apply for prospecting licenses before selling 51 per cent government equity as the first option. It said the remaining stake could be offered to the public after the company became commercially viable.