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The Department of Investment and Public Asset Management (DIPAM) on Thursday announced the government invites expression of interest (EOI) for strategic disinvestment in Ferro Scrap Nigam Limited (FSNL), a 100% subsidiary of MSTC. The EOI has been floated from today onward and the last date for submission is set for May 05.
As per the DIPAM statement, the last date for submission of EOI for FSNL is May 05, 2022, by 6 pm. Further, the last date and time for submission of physical copies for IBs submitting electronically stand May 12, by 6 pm. The government will intimate about the shortlisted bidders on May 25, 2022.
BDO India LLP has been appointed as transaction advisor by the DIPAM.
In the EOI statement, DIPAM said, "interested Bidders shall be required to participate in the tender process inviting “Expression of Interest for strategic disinvestment of Ferro Scrap Nigam Limited" and can either: physically submit all documents in hardcopy before the Due Date at the following address."
Incorporated in March 1979, FSNL is a Mini-Ratna II, IMS Certified Company, and a 100% subsidiary of MSTC. It is a specialized steel mill service provider engaged in scrap processing for various steel mill companies in India. FSNL has become the largest recycler in India in terms of the volume of scrap and slag handled across multiple plants.
Currently, FSNL specializes in the recovery and processing of scrap from slag and refuse generated during iron and steel making across different steel plants. They offer services for digging and haul of blast furnaces and steel melting shop slag at slag yards, processing of iron and steel skulls, mill rejects, and maintenance scrap as per the specific requirements of its customers. The Company also undertakes scarfing of metal slabs, crushing, and screening of LD slag to be used in sinter plants, blast furnaces, steel melting shops and rail ballast. It removes sludge and ash deposits from sludge compartments and ash ponds. It handles and neutralizes acid sludge in open-hearth muck dump.
Here are key investment considerations as per DIPAM:
1. FSNL offers an acquisition opportunity of an established platform with over 4 decades of operating history for new investors entering the Indian market. The company has a diverse asset bank spread across multiple locations which are capable of undertaking end-to-end services in the scrap handling and slag management business. There is also a strong team of highly experienced professionals having strong business relations with some of the largest steel manufacturers in the country. Companies looking to leverage from this platform shall be better suited in establishing its market presence with capabilities in place to ramp-up business.
2. Potential investors shall gain from the opportunity of tapping into a new pool of clientele along with business upsides to be derived by introducing operational efficiencies across its various sites. FSNL is currently the largest player in terms of volume of scrap handling and slag management business in India and this in turn shall not only enhance the overall business volume of the acquiring company but offer multiple avenues to gain from the business synergies.
3. Opportunity to widen the service base for companies engaged in comparable businesses including slag management, in-plant services, etc. but currently not catering to the steel sector. FSNL shall provide a strong entry opportunity for such businesses in the steel production industry which shall have deep synergies with the current operations of the investor companies across industries.
As of September 30, 2021, FSNL has a cash balance of ₹169.9 crore along with a zero debt servicing obligation company.
On October 27, 2016, the Cabinet Committee on Economic Affairs (“CCEA"), GoI accorded its ‘in-principle’ approval to disinvest entire equity shareholding held through MSTC in FSNL, through strategic disinvestment (“Strategic Disinvestment") and transfer of management control.
DIPAM will oversee the strategic disinvestment on behalf of GoI and has appointed BDO India LLP.as its transaction advisor through the tendering process.
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