Govt gives nod for sale of three SAIL plants
The government has approved an outright sale of state-owned Steel Authority of India’s (SAIL) three special steel units, including Salem and Alloy Steel plants.
In pursuance, SAIL has now sought advisors, 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 with transfer of management control,” SAIL said in the Request for Proposal for appointing advisors.
The Maharatna public sector undertaking is scouting for transaction advisor from professional consulting firms, investment bankers or financial institutions, to provide advisory services and manage the disinvestment process.
The transaction advisor 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 assetbased valuation. Along with the report of asset value, 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 ~15,000 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.