The Centre on Wednesday cancelled the disinvestment plans of the Salem Steel Plant, the stainless steel making unit of the Steel Authority of India Ltd (SAIL), citing lack of interest from bidders.

According to a statement from the Ministry of Finance, multiple EoIs had been received and bidders were shortlisted. However, due to lack of interest of these short-listed bidders “to proceed further” the disinvestment proposal stands annulled.

“...due to lack of interest of shortlisted bidders to proceed further with the transaction, Government of India with the approval of Alternative Mechanism (Empowered Group of Ministers) has decided to annul the current EoI thereby terminating the present transaction,” the statement said.

Strategic disinvestment

Incidentally, the Cabinet Committee on Economic Affairs (CCEA) had accorded ‘in-principle approval’ for strategic disinvestment of Salem Steel Plant in Tamil Nadu.

The Salem Steel Plant, a unit of SAIL, is said to have pioneered the supply of wider width stainless steel sheets and coils in India. The plant can produce austenitic, ferritic, martensitic & low-nickel stainless steel in the form of coils & sheets as an annual capacity of 70,000 tonnes in Cold Rolling Mill & 3,64,000 tonnes a year in Hot Rolling Mill. Its steel melting shop can produce 1,80,000 tonnes of slabs per annum.

Also read
The Steel Ministry, in its office memorandum, acknowledged the representation from various trade bodies and noted that a surge was observed in the import of stainless steel flat products from Chin

Steel Ministry asks FinMin to consider customs duty on stainless steel imports from China

As part of the strategic disinvestment plans, a global EoI was invited by SAIL in July 2019. Post short-listing of bidders, the disinvestment process had reportedly entered stage – II, where buyers were to visit the site.

Friction with TN Government

The disinvestment plans had led to friction between the Centre and the Tamil Nadu government. Attempts to bring the Tamil Nadu government on-board had not yielded desired results either.

At one point, the Union Steel Minister, Jyotiraditya Scindia, while responding to questions in Parliament had mentioned that the Tamil Nadu government has failed to create a security environment for investors to visit and carry out due diligence. The same has been noted in internal documents of the Ministry, seen by businessline.

The internal note of the Ministry reads, “for organising site visit of SSP by short-listed bidders, SAIL took up the matter with the Police authorities / District Administration and the Tamil Nadu government several times”. It also mentioned that the CMDs of SAIL spoke with the Chief Secretary of Tamil Nadu on February 17, April 10, and October 28 of 2021 “requesting to facilitate the planned site visit of the bidders to Salem Steel Plant”.

“The visit is yet to take place,” the last internal note of the Ministry dated October 2023 mentioned. It also mentioned that the ‘action to be taken” by the State government includes “extend(ing) security for facilitating site visit by prospective bidders”.

Senior officials of the Ministry had also discussed the issue with State government to facilitate subsiding the existing resentment against proposed disinvestment.

Related Topics
comment COMMENT NOW