 "SAIL")
The government has approved outright sale of state-owned Steel Authority of India Limited's (SAIL's) three special steel units, including Salem and Alloy Steel plants.
In pursuance of the decision, 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 of Steel Authority of India Ltd with transfer of management control," SAIL said in the request for proposal (RFP) for appointing advisors.
The Maharatna PSU is scouting for transaction advisor from professional consulting firm, investment bankers, 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 plants 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 asset based 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 Rs 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.
SSP in Tamil Nadu can produce stainless steel in the form of coils and sheets with an installed capacity of 70,000 tonnes a year in cold rolling mill and 3.64 lakh tonnes a year in hot rolling mill.
Located in Bhadravati, Karnataka, VISP produces high quality alloy and special steels and pig iron. The unit has an installed capacity of 2.16 lakh tonnes of hot metal and 98,280 tonnes of alloy and special steels.
The transaction advisor, who will be eligible for managing the sale of these three units, should have at least 5 years of experience in providing similar advisory services for disinvestment, strategic sale, M&A activities, private equity transaction and sale of assets.
The bidder is required to have advised, handled and successfully completed at least one transaction of merger or acquisition or takeover or strategic sale or disinvestment of similar nature in the manufacturing sector, preferably steel, of the size of Rs 2,000 crore or more after April 1, 2011.
Also, the firm should have an average annual turnover of Rs 100 crore from advisory services in the last five years after April 1, 2011.
The government currently holds 75 per cent stake in SAIL, which is the largest steel producer in India with a turnover of Rs 43,337 crore in 2015-16. The company's paid-up capital stood at Rs 4,130 crore.
Apart from the three special steel plants, SAIL owns and operates five integrated steel plants in Bhilai, Rourkela, Durgapur, Bokaro and Burnpur. It has a refractory unit in Bokaro and Chandrapur Ferro Alloy Plant in Maharashtra.
In addition, it operates nine iron ore, three limestone, three dolomite and three coal mines for captive consumption.
