In an exciting turn of events, NMDC (National Mineral Development Corporation) Steel has made its highly anticipated debut on the BSE and NSE stock exchanges. With a listing price of ₹37.75 per share, the demerger of NMDC’s steel business has finally come to fruition, marking a significant milestone for the company.
Details of NMDC Steel
NMDC Steel, a wholly-owned subsidiary of India’s largest iron ore producer, NMDC, is located in Nagarnar, Chhattisgarh. The government currently holds a majority stake of 60.79% in NSL, with plans to sell 50.79% of its shareholding and management control.
According to DIPAM Secretary Tuhin Kanta Pandey, the government has already received multiple preliminary bids for the privatization of NMDC Steel, and the transaction will now move to the second stage. The government had invited preliminary bids or expressions of interest (EoI) for the strategic sale, with the last date for submitting bids being January 27, 2023.
Demerger is a distribution of large business companies into two or smaller entities. The business strategy behind this is to transfer the undertakings of one or more companies to another company.
NMDC’s board approved the scheme of arrangement between the company, NMDC Steel, and their respective creditors and shareholders in July 2022. This involved the demerger of the Nagarnar Iron & Steel Plant (NISP) from NMDC to NMDC Steel, paving the way for the listing of NMDC Steel on the stock exchanges.
Privatization of NMDC Steel
In October of 2022, NMDC shares started trading ex-demerger, with eligible investors receiving one share of NMDC Steel for every share held in NMDC. This marked an important step towards the eventual privatization of NMDC Steel.
Ex-demerger refers to a situation where a company’s shares are trading without the value of a subsidiary or division that has been separated from the parent company through a demerger or spin-off.
The CCEA (Cabinet Committee on Economic Affairs) had given its ‘in-principle” approval to the demerger of the Nagarnar steel manufacturing unit from NMDC and strategic disinvestment of the resulting entity by selling the Government of India’s entire stake in October 2020.
With the successful listing of NMDC Steel on both BSE and NSE, there is a promising outlook. As India’s largest iron ore producer, NMDC is well-positioned to establish a thriving steel manufacturing business, likely to attract investor attention due to its potential for growth and profitability.
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