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The Centre on Thursday approved Konoike Transport Co Ltd as successful bidder for disinvestment of Ferro Scrap Nigam Ltd (FSNL), which is 100 per cent subsidiary of MSTC.
“The Alternative Mechanism, empowered by the Cabinet Committee on Economic Affairs, comprising Nitin Gadkari (Road Transport and Highways Minister), Nirmala Sitharaman (Finance Minister) HD Kumaraswamy (Steel Minister), have approved the highest bid amounting to ₹320 crore of Konoike Transport Co. Ltd for sale of 100 per cent equity shareholding of MSTC Ltd in FSNL, along with transfer of management control,” a Finance Minister statement said.
The transaction now moves to concluding stage. The next steps include issuing the Letter of Award, signing the Share Purchase Agreement (SPA), fulfilling the conditions precedent as specified in the SPA by respective parties, and closing the transaction.
The strategic disinvestment transaction was implemented through two stage open, competitive bidding process supported by a multi-layered consultative decision-making mechanism involving Inter-Ministerial Group, Core Group of Secretaries on Disinvestment and the empowered Alternative Mechanism.
FSNL was incorporated on March 28, 1979 to provide steel mill services. It specialises in the recovery and processing of scrap from slag and refuge generated during iron and steel making across different steel plants. CCEA had granted ‘in-principle’ approval in October, 2016 for strategic disinvestment of entire equity shareholding of MSTC Ltd in FSNL to a strategic buyer to be identified through two-stage auction process.
2 bids
The reserve price for the transaction was independently fixed at ₹262 crore on the basis of valuation carried out by experts (Transaction Adviser and Asset Valuer). Thereafter, the two technically qualified financial bids were opened in the presence of the representatives of the bidders. The bid submitted by Konoike Transport Co. Ltd at ₹320 crore was higher of the two bids and was also above reserve price. The other bid was of Indic Geo Resources Pvt. Ltd. (a subsidiary of Chandan Steel Ltd.).
Konoike Transport Co Ltd is a multifaceted Japanese corporation listed on the Tokyo Stock Exchange. Konoike’s Steel Division is a long-established segment of the company, with over 140 years of experience in steelworks operations. The division provides comprehensive services ranging from raw material acceptance to manufacturing processes, slag treatment, scrap processing, examination, packaging and delivery of steel products, supporting customers’ operations. The division also engages in recycling projects, such as the Perfect Recycling System, which recycles industrial waste without producing secondary waste.
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