The Steel Authority of India (SAIL) is offering lease of a limestone mine, forest clearance till 2030 and 3,155 acres as part of the strategic divestment programme for three of its special steel plants whose losses totalled ₹375 crore in 2018-19.
The plants on offer are Alloy Steel Plant (ASP) in Durgapur, Salem Steel Plant (SSP) in Tamil Nadu and Visvesvaraya Iron and Steel Plant (VISP) in Karnataka. Global bids for expression of interest in these units were floated last week. Debts of these three units will remain with SAIL. According to the Department of Investment and Public Asset Management (DIPAM), these units would be transferred on a going concern basis.
VISP, based in Bhadravati, brings to a prospective investor 847.3 acres on perpetual lease and 636.8 acres of township land on a leave licence basis for five years at market rates.
Agreements for shared services may also be signed as part of the transaction, which includes transfer (with the State government’s approval) of a limestone mine in Bhadigund.
An iron ore mining lease in Bellary would also be on offer if SAIL receives the lease before the divestment. Forest clearances till 2030 also come with the package. Many of VISP’s steel-making units are shut down due to lack of orders and raw materials at competitive rates.
It carries on rolling and forging by getting input billets from SAIL plants.
Although the largest loss-making unit on offer ( ₹259 crore in fiscal 2019), SSP also brings the largest land parcel —1,708 acres including 1,130 acre of plant land on perpetual lease. SAIL will retain and use the trademark .The unit is known for making coin blanks.
ASP in West Bengal’s Durgapur is the oldest of the lot. It has a diverse portfolio serving defence, railways, automobiles and power sector and a ₹40.6 crore loss. SAIL proposes to transfer 600.2 acres comprising plant, administration building, power complex and an air separation unit. There are 2,032 permanent employees at these units whose fate would be decided later. The offer closes on August 1.
Strategic divestment is one of the two divestment routes being taken by the government (the other being divestment of specified portion). It comes through a consultation process among various ministries, including NITI Aayog which identifies the units, the percentage to be sold and valuation method. It then goes to the Core Group of Secretaries on Disinvestment and then to the CCEA.
In case of these three units, the SAIL Board approved 100% divestment of these units at meetings held between August 2017 and June 2019.
