Following this, SAIL has sought advisers, including legal and merchant bankers, to carry out the strategic sale along with transfer of management control...
in the three steel plants—Alloy Steels Plant (ASP), Salem Steel Plant (SSP) and Visvesvaraya Iron and Steel Plant (VISP).
"The government of India has 'in-principle' decided for strategic disinvestment of ASP, SSP and VISP of Steel Authority of India Ltd with transfer of management control," SAIL said in the request for proposal (RFP) for appointing advisers.The PSU is scouting for transaction advisor from professional consulting firm, investment bankers, financial institutions, to provide advisory services and manage the disinvestment process.
Steel Authority of India Limited (SAIL) is the largest steel-making company in India and it produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures and sells a broad range of steel products. The Government of India owns about 75 percent of SAIL's equity. The transaction adviser will advise SAIL on the modalities and timing of the strategic disinvestment of the three steel plans and prepare a detailed operational scheme to successfully implement the process, indicating tentative timelines for each activity.
The firm will also finalise the process of strategic sale as to whether it will be done through bidding or auction and assist SAIL in fixing the range of the fair reserve price considering the valuation of the divesting plants. The reserve price will be based on valuation methods like discounted cash flow, relative valuation, and asset based valuation.
It will highlight the pros and cons of adopting these methods of valuation.The strategic sale of these three units is likely to happen only in the next financial year beginning April. The government has budgeted to raise Rs15,000 crore from strategic disinvestment in 2017-18.
ASP is located at Durgapur in West Bengal spread over around 467.22 hectares. It has a diverse product portfolio of over 400 grades catering to end-use by strategic sectors like defence, railways, automobiles, power plants, heavy engineering and manufacturing industries.
SSP in Tamil Nadu can produce stainless steel in the form of coils and sheets with an installed capacity of 70,000 tonnes a year in cold rolling mill and 3.64 lakh tonnes a year in hot rolling mill. Located in Bhadravati, Karnataka, VISP produces high quality alloy and special steels and pig iron. The unit has an installed capacity of 2.16 lakh tonnes of hot metal and 98,280 tonnes of alloy and special steels.