Strategic Buyer Approved for Privatisation of Neelachal Ispat Nigam Ltd

Strategic Buyer Approved for Privatisation of Neelachal Ispat Nigam Ltd Alternative Mechanism, comprising Shri Nitin Gadkari, Union Minister for Road Transport and Highways, Smt. Nirmala Sitharaman, Union Minister for Finance & Corporate Affairs and Shri Piyush Goel, Union Commerce & Industry Minister, which is empowered by the Cabinet Committee on Economic Affairs, have approved the highest bid of M/s Tata Steel Long Products Limited for 93.71% of shares of Joint Venture partners of 4 CPSEs and 2 Odisha Govt State PSEs at the Bid Enterprise Value of Rs. 12,100 crore. Neelachal Ispat Nigam Ltd. (NINL) is a joint venture of 4 CPSEs, namely MMTC, NMDC, BHEL, MECON and 2 Odisha Govt. PSUs, namely OMC and IPICOL. NINL has an integrated steel plant with a capacity of 1.1 MT, at Kalinganagar, Odisha. The company has been running in huge losses and plant is closed since 30.3.2020. The company has huge debt and liabilities exceeding Rs. 6,600 crores as on 31.3.2021, including huge overdues of promoters (Rs 4,116 crore), Banks (Rs 1,741 crore), other creditors and employees. The company has negative networth of Rs. 3,487 crore and accumulated losses of Rs. 4,228 crore as of 31.3.2021. Govt. of India does not hold any equity in the company. However, on the request of the Boards of selling shareholder PSEs and on concurrence by the Govt of Odisha, CCEA ‘in-principle’ approved strategic disinvestment of NINL on 8.1.2020, and authorised Department of Disinvestment & Public Asset Management (DIPAM) to undertake the transaction. The transaction was made through an open-market, competitive bidding process towards the enterprise value of the company, comprising the liabilities of the company as on 31.3.2021 and the 93.71% equity of the company held by the 6 selling PSE shareholders. The transaction was executed through the extant consultative multi-layered decision mechanism-based procedure involving Inter Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CGD) and the empowered Alternative Mechanism. Govt. of Odisha with their companies, OMC & IPICOL having stake of 32.47% was also part of the decision-making at every stage. On January 25, 2021, Expressions of Interest (EoI) were requested. Multiple Expressions of Interest were received by the deadline of March 29, 2021. By providing access to the company's virtual data room, interested parties were given the opportunity to conduct due diligence. These interested parties were also given site tours and were given the proposed sale terms and conditions in the form of a draught SPA. Following AM's approval, the SPA was finalised and shared with bidders, along with the RFP released on December 3, 2021 for soliciting financial offers. In response, 3 bids were received by the due date, i.e 23.12.2021 in sealed cover which were kept in safe custody. As per the extant procedure, the Reserve Price was subsequently recommended by the IMG after detailed examination of the valuation reports prepared by the TA and the AV, and was approved by the CGD at Rs. 5616.97 crore. Thereafter, the financial bids were opened for the following qualified bidders, who had submitted the bids:-

I. Consortium of M/s Jindal Steel & Power Limited and Nalwa Steel and Power Ltd. II. M/s JSW Steel Limited III. M/s Tata Steel Long Products Limited (TSLP)

M/s Tata Steel Long Products Limited (TSLP) emerged as H-1 bidder, whose bid has been accepted by the AM. Letter of Intent (LoI) is being issued to TSLP inviting them to sign the SPA. At this stage, 10% of the bid amount shall be paid by the successful bidder into the Escrow account. On the closure date, shares will be transferred to the strategic buyer and the balance amount will be received to be utilized in the manner prescribed in the Waterfall agreement 27.10.2021 signed amongst the selling shareholders. Part-sale proceeds would be infused in the company to the extent of the liabilities which will be set-off and the balance amount in the escrow account will selling shareholders proportional to their shareholding. The privatisation of a public sector steel production business in India is a first. The transaction's success is a win-win situation for everyone involved. The most significant benefit of privatisation will be to the region's local economy, as a smart buyer will be able to reopen a shuttered factory, introduce current technology, best management practises, and inject new cash, all of which will enable the company expand its capacity. Govt. of Odisha has given active support to the process of privatization. The privatization will help in creating new jobs in the region by creation of ancillary industries and supplier’s network. Keeping in view the best interest of the serving employees, it was decided to keep the employees’ dues as the top most ranking liability in the Waterfall Agreement to be satisfied first before any other liability. The transaction is on “going concern” basis and the employees of NINL will continue to be the employees of the company in terms of the Share Purchase Agreement (SPA), which binds the buyer to have a lock-in period of one year. The strategic buyer will also be bound to follow the terms of VRS applicable to CPSEs whenever such a decision is taken. Post-sale consideration will go towards settling of the liabilities of the company, in the order provided in Waterfall Agreement.