The strategic divestment of NMDC Steel is expected to be completed in the first half of this fiscal, which could bring the government about Rs 11,000 crore for the sale of its 50.79% stake, official sources said.

This will be the second strategic divestment in the steel industry after Neelachal Ispat Nigam Ltd (NINL) last year. To ensure the smooth sale of the new 3 million tonnes/year steel plant, the government has no objection to the requirement to absorb more than 1,000 employees into NMDC rather than from NMDC Steel, the officials said.

On January 27, the Centre received several expressions of interest (EoIs) for its 50.79% stake in the newly built NMDC Steel Ltd (NSL) in Naganar, Chhattisgarh. In addition, the Centre will offer NMDC a 10% stake in NSL after a strategic buyer is identified through a bidding process.

Only interested bidders found to meet the eligibility criteria will be allowed to participate in the next phase of the transaction, which includes detailed due diligence and submission of financial bids.

With the demerger of NMDC completed, the Centre will soon invite financial bids to take NSL private.

Shares of NMDC’s steel unit rose 8% to close at Rs 32.7 on Thursday after listing on the stock exchange at Rs 30.25 on February 20.

In a competitive bidding process involving some of the top domestic and global steel companies, the strategic sale is expected to be significantly higher than reflected in the market share price.

NMDC has invested around Rs 22,000 crore in constructing the new factory, which will be operational anytime from now. Therefore, the implementation risk is low. The planned completion date for the plant is March 2023.

NSL will be the second steel firm to be disinvested after the successful strategic disinvestment of Odisha-based NINL, jointly owned by four central PSUs and two Odisha government PSUs, for Rs 12,100 crore to the Tata group in January 2022.

Steel demand in India is expected to be driven by increased infrastructure spending owing to increasing urbanisation and rising income levels of India’s emerging middle class. Several government initiatives promote the construction and infrastructure sectors, such as housing for all, Bharatmala Pariyojana, smart cities, freight corridors, expansion and development of the railway network, and shipbuilding to help the steel industry.