Japanese firm Konoike Transport will be strategic buyer for disinvestment of FSNL, a 100% MSTC subsidiary

New Delhi [India], September 19 : An empowered committee led by Union ministers Nitin Gadkari, Nirmala Sitharaman, and HD Kumaraswamy approved the highest bid amounting to Rs 320 crore of Japanese firm Konoike Transport Co Ltd for sale of 100 per cent equity shareholding of MSTC Ltd in Ferro Scrap Nigam Limited (FSNL), along with the transfer of management control.
FSNL is a 100 per cent subsidiary of MSTC Ltd under the Ministry of Steel (MoS) and was incorporated on March 28, 1979, to provide steel mill services. FSNL specializes in the recovery and processing of scrap from slag and refuge generated during iron and steel making across different steel plants.
"The strategic disinvestment transaction was implemented through a two-stage open, competitive bidding process supported by a multi-layered consultative decision-making mechanism involving Inter-Ministerial Group, Core Group of Secretaries on Disinvestment and the empowered Alternative Mechanism," the Ministry of Finance said, announcing the successful bidder.
The transaction now moves to the concluding stage. The next steps include issuing the Letter of Award, signing the Share Purchase Agreement (SPA), fulfilling the conditions precedent as specified in the SPA by respective parties, and closing the transaction, the ministry said in a statement.
Cabinet Committee on Economic Affairs had granted 'in-principle' approval in October 2016 for the strategic disinvestment of the entire equity shareholding of MSTC Ltd in Ferro Scrap Nigam Ltd. (FSNL) to a strategic buyer to be identified through the two-stage auction process.
Six Interested Bidders (IBs) expressed their interest, out of which five bidders were shortlisted as qualified bidders. Post-shortlisting, Qualified Interested Bidders (QIBs) conducted due diligence on the company. Also, the security clearance was obtained from MHA in respect of four QIBs who sought security clearance.
The Request for Proposal (RFP) along with Share Purchase Agreement (SPA) containing terms and conditions was issued on 02.01.2024 inviting financial bids. Two sealed financial bids were received from the QIBs in response to the RFP by the due date of 31.01.2024.
After the receipt of the sealed financial bid, the Reserve Price for the transaction was independently fixed at Rs 262 crore based on a valuation carried out by experts (Transaction Adviser and Asset Valuer).
Thereafter, the two technically qualified financial bids were opened in the presence of the representatives of the bidders. The bid submitted by M/s. Konoike Transport Co Ltd at Rs 320 crore (Three hundred and twenty crores only) was higher of the two bids and was also above the reserve price. The other bid was of M/s Indic Geo Resources Pvt. Ltd. (a subsidiary of Chandan Steel Ltd.)
Konoike Transport Co Ltd is a multifaceted Japanese corporation listed on the Tokyo Stock Exchange. Konoike's Steel Division is a long-established segment of the company, with over 140 years of experience in steelworks operations.
The division provides comprehensive services ranging from raw material acceptance to manufacturing processes, slag treatment, scrap processing, examination, packaging, and delivery of steel products, supporting customers' operations. The division also engages in recycling projects, such as the Perfect Recycling System, which recycles industrial waste without producing secondary waste.
Indic Geo Resources Private Limited is a subsidiary Company of Chandan Steel Limited incorporated on October 31, 2014, to provide services of the processing of ferrous scrap from slag and processing of slag in steel plants. It had relied on the financial strength of its Parent Company to participate in the proposed transaction and the Parent Company had fulfilled the financial criteria.