In order to get rid of three operational loss-making units, Steel Authority of India (SAIL) has invited expressions of interest (EoIs) from potential bidders for outright sale of these units. A similar attempt in 2017 did not fructify for want of buyers.
The three units – Alloy Steel Plant (ASP), Salem Steel Plant (SSP) and Visvesaraya Iron and Steel Plant (VISP) — have incurred combined loss of `2,300 crore in the last five years, causing a huge strain on SAIL’s books. These three units have a total of 2,100 permanent employees.
ASP, SSP and VSP are located in West Bengal, Tamil Nadu and Karnataka, respectively.
They will be transferred to winning bidders, to be chosen through a competitive bidding process, on a going concern basis by way of slump sale through business transfer agreement. The proceeds may not contribute much to the government’s `1.05 lakh crore disinvestment target for the current fiscal.
The Cabinet Committee on Economic Affairs had on October 27, 2016 approved “in-principle” strategic disinvestment of these units on recommendations of the NITI Aayog. The board of SAIL gave its in-principle approval for the same on February 9, 2017, though the final approval for divestment of 100% stake came in its different sittings. For VISP and ASP, the final approval came on August 11, 2017; while for SSP, it came on June 28, 2019.
ASP was commissioned in January 1965 as a unit under erstwhile Hindustan Steel (HSL). In 1978, HSL was dissolved and its assets were transferred to SAIL, resulting in ASP becoming one of the operating units of SAIL. Through multiple expansions, the capacity of the plant has been increased to 1.84 lakh tonne (saleable steel). ASP has a total of 758 employees. Of ASP’s total area of 1,154 acre under possession, 600 acre is proposed to be divested as part of the transaction.
VISP was founded in 1923 as a small pig iron unit. In 1989, SAIL purchased the shares and made the company its subsidiary. VISP pioneers production of high quality alloy and special steels. At present, VISP has an installed capacity of 2.2 lakh tonne of hot metal and 0.98 lakh tonne of saleable steel. VISP has 333 permanent employees. VISP has 1,661 acre under possession, of which 847 acre will be divested as part of the transaction. SAIL will keep the remaining land itself. Since January 2017, production has been stopped in the unit for want of orders.
SSP had in 2018-19 utilised 82% of its 2.87 lakh tonne per annum hot-rolled coil making capacity. The unit sells its products to railway coach factories, mints and public sector units like BHEL and NTPC. SSP has 941 employees. Of the total 3,973 acre in possession, 1,708 acre would be divested as part of the disinvestment plan. EoIs can be submitted till August 1. SAIL has appointed SBI Capital Markets as the transaction advisor.
Source: Financial Express