Tata, JSW, ArcelorMittal to lock horns over PSUs

Robust steel demand and high prices are powering private steelmakers in India to vie for the public sector steel companies, which are up for sale under the Narendra Modi government's 2021-22 disinvestment plan. According to sources, Sajjan Jindal controlled JSW Steel will compete with Tata Steel in acquiring 7.3 million tonne (MT) Rashtriya Ispat Nigam Limited (RINL).

The government has already shortlisted both the giants in the disinvestment process for Neelachal lspat Nigam Ltd (NINL) along with LN Mittal's ArcelorMittal. The qualified interested parties who were shortlisted after submitting expressions of interest (EoIs), have been given access to data room and are now contemplating to submit the request for proposal (RFP).

Tata and JSW have their facilities nearby NINL's integrated steel plant at Kalinganagar Industrial Complex in Odisha. The state-run firm has 1.1 MT integrated iron and steel plant with captive power plant and captive iron ore mine in Sundergarh and Keonjhar.

Seshagiri Rao, Joint Managing Director & Group CFO , JSW Steel earlier confirmed that the company would be interested in engaging in the disinvestment process for NINL, RINL and Nagarnar Steel, an integrated steel plant being built by NMDC in Bastar District, Chhattisgarh. He said that JSW will be bidding for all three assets. T V Narendran, CEO & MD of Tata Steel recently confirmed the company's interest in RINL, India's first shore-based integrated steel plant.

For the 3 MT Nagarnar plant, Chhattisgarh government will also submit the bid. The state legislative assembly in December last year unanimously adopted a resolution expressing the state’s willingness to buy the integrated steel plant for protecting the interests of tribal population in the Bastar region.

The Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval for 100 per cent disinvestment of government stake in RINL and NINL. RINL has about 22,000 acre of land and enjoys access to Gangavaram Port. The buyers of the company will get access to the South East Asian markets as well.

The steel demand uptick stems from the government’s thrust on infrastructure in the rural markets. However, the steel prices dipped slightly since it hit the peak in July. Metal stocks plunged on Friday due to a crash in iron ore futures gpibally on expectations of waning demand from China and an increasing likelihood of US Federal Reserve tapering. Fed is expected to slow down the pace of its monthly bond purchases and it will force Foreign Institutional Investors (FIIs) to pull out from markets like India. However, the analysts believe that the Indian steel companies are better positioned with the ongoing balance sheet repair, enhanced earnings and margins.

The government plans to raise ₹1.75 lakh crore through disinvestment and stake sales in 2021-22. In expects to raise ₹1 lakh crore from sale of government stake in LIC and banks.