After Air India was acquired by Talace Pvt Ltd, another Tata Group firm Tata Steel Long Products won the race to acquire 93.71% in Odisha-based Neelachal Ispat Nigam (NINL), jointly owned by four central PSUs and two Odisha government PSUs for Rs 12,100 crore as enterprise value (EV) consideration.

Tatas bested the bids by a consortium of Jindal Steel & Power as well as Nalwa Steel and Power. The reserve price for the ailing NINL was set at Rs 5,617 crore. Tata Steel Long Products (TSLP) share price closed at Rs 768.85 on Monday, up 6.19% from the previous closing price.

On January 27, India’s flag carrier Air India returned to the hands of Tata Group, which founded it close to 90 years ago. The diversified conglomerate’s unit Talace had won the race for full ownership of the loss-making state-owned airline in October last year, by offering Rs 8,000 crore as EV consideration.

“Government approves strategic buyer for Neelachal Ispat Nigam Ltd located in Odisha. The highest bid of Rs 12,100 crore by Tata Steel Long Products Ltd is accepted,” department of investment and public asset management secretary Tuhin Kanta Pandey tweeted on Monday.

NINL is a joint venture of 4 CPSEs, namely MMTC (49.78%), NMDC (10.10%), BHEL (0.68%), MECON (0.68%), and two Odisha government PSUs, namely OMC (20.47%) and IPICOL (12%). NINL has an integrated steel plant with a capacity of 1.1 MT, at Kalinganagar (Jajpur), Odisha.

The company has been incurring huge losses for years and the plant has been closed since March 30, 2020. It has debt and liabilities exceeding Rs 6,600 crore as of March 31, 2021, including huge overdue of promoters (Rs 4,116 crore), banks (Rs 1,741 crore), other creditors and employees. The company has a negative net worth of Rs 3,487 crore and accumulated losses of Rs 4,228 crore as of March 31, 2021.

The government of India does not hold any equity in the company.

“Letter of Intent is being issued to TSLP inviting them to sign the SPA (share purchase agreement). At this stage, 10% of the bid amount shall be paid by the successful bidder into the escrow account,” the Union finance ministry said in a statement.

The transaction is on a “going concern” basis and the employees of NINL will continue to be the employees of the company in terms of the SPA, which binds the buyer to have a lock-in period of one year. The strategic buyer will also be bound to follow the terms of VRS applicable to CPSEs whenever such a decision is taken.

Keeping in view the best interest of the serving employees, it was decided to keep the employees’ dues as the topmost ranking liability in the Waterfall Agreement to be satisfied first before any other liability, it said.

This is the first instance of privatisation of a public-sector steel manufacturing enterprise in India.

NINL’s land bank provides a ready expansion opportunity. The total land area leased to NINL at the existing facility is around 2,500 acre. The plant facilities are located at a strategic location at Kalinganagar Complex, with proximity to iron ore and other raw materials. It also has been allotted captive iron ore mine in Sundargarh and Keonjhar districts of Odisha.