New Delhi: The Department of Investment and Public Asset Management (DIPAM) has extended the last date for submission of bids for strategic disinvestment of Ferro Scrap Nigam Limited, a 100% subsidiary of MSTC Limited, under the Ministry of Steel. month to June 6, and has clarified that the company is in the process of extending its existing contracts.
The department, in a series of clarifications to interested bidders, said that the company was in the process of seeking extension on the existing set of contracts expiring within FY23. The bidders had sought clarity on the duration of these contracts as they would have to decide whether to bid for the PSU or not and get the return on investment for the bidders.
“For calculation of ROI it will be important to know whether the contracts especially in SAIL plants will be automatically awarded to the successful bidder and extended for a minimum period of 5 years,” the bidders had highlighted.
The department also clarified that the successful bidder would be required to fulfill certain obligations related to employee safety, business continuity, asset stripping, lock-in of shares received in the transaction, and the consortium members’ share in the special purpose vehicle. The terms will be specified at the request for proposal or RFP stage, it added.
This clarification was issued in response to a question whether the winning bidder would have to retain and continue to retain the full staff strength of 130 officers, 460 non-executives, 861 contractual personnel and sub-contractors engaged by FSNL.
The government has started the process of selling its entire stake in FSNL through MSTC Limited in a strategic sale where management control will also be relinquished to a profit-making central public sector enterprise.
The government has appointed BDO India Limited as consultant for the transaction. The government will inform the shortlisted bidders by June 27 instead of the earlier date of May 25.
The Cabinet Committee on Economic Affairs had in October 2016 given ‘in-principle’ approval for disinvestment of entire equity shareholding held through MSTC in FSNL through strategic disinvestment and transfer of management control.
FSNL is a Mini Ratna II CPSE, 100% subsidiary of MSTC, incorporated in 1979 to provide steel mill services including steel mill slag processing for recovery of iron scrap and other metal. The company has nine steel plants in India, and specializes in the recovery and processing of scrap from slag and waste generated during iron and steel making at various steel plants. It provides services for excavation and hauling of slag, processing of iron and steel skulls, mill rejects and maintenance scrap at slag yards as per the specific requirements of its clients.
FSNL has become the largest recycler in India in terms of quantity of scrap and slag at multiple plants. For FY21, the company reported revenue of 352.74 crore and profit 22.75 crores. The revenue for the quarter ended September 2021 was 101.78 crore and profit was 10.63 crores.
As on 30 September 2021, the cash balance with FSNL is 169.9 crore with zero debt service liability, as per the preliminary information memorandum issued by the government.
Government sets disinvestment target for FY23 65,000 crores.