A media report quoting sources said that the Prime Minister`s Office (PMO) has accorded its approval to the sale and Department of Investment and Public Asset Management (DIPAM) will now start the process of appointment of transaction advisors to conclude the deal quickly.
The three units of SAIL identified for strategic disinvestment...
includes Visveswaraya Iron and Steel Plant, Bhadravati, Karnataka, Salem Steel Plant, Tamil Nadu, and Alloy Steel Plant, Durgapur, West Bengal.
All these units of the steel giant have been consistently making losses and sale has been considered the best option.
The disinvestment of these units will be to strategic buyers to be identified through a two-stage auction process. Sources said that with the steel market on the upswing again, the units could realise good value. Companies like JSW Steel, Vedanta, Tata Steel, ArcelorMittal have been in a look-out for new assets. However, the likely amount to be mobilised could not immediately ascertained.
Visvesvaraya Iron and Steel Ltd, Bhadrawati, which was taken over by SAIL in 1997, produces alloy steel and pig iron. It was started by M. Visvesvaraya, a diwan of Krishnaraja Wodeyar and the then ruler of Mysore, in 1923 under the name of Mysore Iron Works.
Salem Steel is also an old unit with SAIL that produced high grade stainless steel with utensils branded in its name being household name earlier.
The government wants to conclude the deal for SAIL units at the earliest so the fund mobilised from the deal helps it in reaching closer to disinvestment target of Rs 80,000 crore for FY19. So far, the disinvestment proceeds have reached closer to Rs 50,000-crore mark.
Earlier, the steel major posted a net profit of Rs 616 crore in Q3 FY19 against a net of Rs 43 crore during the corresponding period last year. The company's net profit improved by more than 11 percent over Q2FY19 at Rs 554 crore. SAIL's turnover for Q3FY19 improved by 3 percent over previous corresponding quarter to Rs 15,660 crore against Rs 15,190 crore during Q3 FY18, an official statement said. The EBITDA in Q3 FY19 was Rs 2,653 crore, an improvement of 70 percent over turnover of Rs 1560 crore in Q2FY18.
The company said it is focusing on ramping up production post modernization. Enhancing the volumes will also bring down the cost of production which will improve the performance as a whole. During Q3 FY19, SAIL recorded the best ever quarterly Crude Steel production of 4.3 million tonne (mt), a 10 percent growth over 3.9 mt in Q3FY18. In the third quarter of FY19 SAIL also recorded the best ever quarterly Saleable Steel production at 3.8 mt, a 5 percent growth over Q3FY18.
Commenting on the performance, SAIL chairman Anil Kumar Chaudhary said: “The potential of steel consumption in domestic market is huge. We are focussed on meeting requirements of all sectors while enhancing our volumes. Higher production of value added steel is another focus area and we are committed to provide end-to-end customer services.” On the current volatility in steel prices he said that despite various factors including cheap imports, the prices are expected to improve in coming days, driven by high input costs.
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