Government Approves Rs 320 Crore Sale of FSNL to Japan's Konoike Transport

An empowered committee with Union ministers sanctioned the sale of MSTC Ltd's 100% equity share in Ferro Scrap Nigam Limited to Konoike Transport for Rs 320 crore. The transaction was a two-stage competitive bidding process. The next steps include issuing awards and signing agreements.

An empowered committee led by Union ministers Nitin Gadkari, Nirmala Sitharaman, and HD Kumaraswamy has approved the highest bid of Rs 320 crore by Japanese firm Konoike Transport Co Ltd for the sale of 100% equity shareholding of MSTC Ltd in Ferro Scrap Nigam Limited (FSNL), along with the transfer of management control. FSNL, a wholly-owned subsidiary of MSTC Ltd under the Ministry of Steel, specializes in the recovery and processing of scrap from slag generated during steel production.

The Ministry of Finance announced the successful bidder, stating that the strategic disinvestment was conducted through a two-stage open and competitive bidding process. This process involved multiple consultative decision-making mechanisms, including the Inter-Ministerial Group, Core Group of Secretaries on Disinvestment, and the empowered Alternative Mechanism. The next steps include issuing the Letter of Award, signing the Share Purchase Agreement (SPA), and fulfilling the conditions precedent as specified in the SPA.

The Cabinet Committee on Economic Affairs had granted 'in-principle' approval in October 2016 for the strategic disinvestment of MSTC Ltd's entire equity in FSNL to a qualified strategic buyer identified through the two-stage auction process. Six interested bidders showed interest, five were shortlisted, and two submitted sealed financial bids. Konoike Transport's Rs 320 crore bid surpassed the reserve price of Rs 262 crore and was higher than the competing bid from Indic Geo Resources Pvt. Ltd. Konoike, a diversified corporation with a steel division possessing over 140 years of experience, will now proceed with the acquisition.

(With inputs from agencies.)