4-Jul-2022: Strategic Disinvestment of Neelachal Ispat Nigam Limited (NINL) completed

Neelachal Ispat Nigam Limited (NINL) is a Joint Venture of 4 CPSEs, namely MMTC (shareholding of 49.78%), NMDC (10.10%), BHEL (0.68%), MECON (0.68%) and 2 Odisha Government PSUs, namely OMC (20.47%) and IPICOL (12.00%).

MNINL Strategic Disinvestment transaction has been completed today with the transfer of 93.71% shares of the Joint Venture Partners (4 CPSEs and 2 Odisha Govt. PSUs) to the Strategic Buyer, M/s Tata Steel Long products Limited. The Enterprise Value paid by the Strategic Buyer is Rs. 12,100 Crores. This payment has been utilized as per the SPA for settlement of dues of employees, operational creditors, secured financial creditors and sellers (operational and financial dues) and for equity of selling shareholders as per SPA.

Following approval of the highest price bid of M/s Tata Steel Long Products Limited on 31st January, 2022, the Letter of Award (LOA) was issued to the winning bidder on 2nd February, 2022.The Share Purchase Agreement (SPA) was signed on 10th March, 2022. Thereafter, the Strategic Partner, NINL and the six Selling Shareholders worked towards satisfying a set of conditions defined in the SPA including certification of operational creditor’s dues, employees’ dues, Sellers’ operational dues and Sellers’ financial dues. These conditions have since been   met to mutual satisfaction.

29-Nov-2021: Government approves strategic disinvestment of Central Electronics Ltd.

The Cabinet Committee on Economic Affairs (CCEA) empowered Alternative Mechanism (AM) comprising Shri Nitin Jairam Gadkari, Union Minister of Road Transport and Highways; Smt. Nirmala Sitharaman, Union Minister for Finance & Corporate Affairs; and Shri Jitendra Singh, Union Minister of State (Independent charge) Ministry of Science and Technology, has approved the highest price bid of M/s Nandal Finance and Leasing Pvt Ltd for sale of 100% equity shareholding of GoI in Central Electronics Ltd (CEL)- a CPSE under the Department of Scientific and Industrial Research (DSIR). The winning bid is for Rs 210,00,60000/- (Rupees two hundred ten crore sixty thousand only).

The process for disinvestment of CEL commenced in 27.10.2016 with the ‘in-principle’ approval of CCEA. In the first iteration, due process was followed for strategic sale of CEL, and the final SPA, along with 'Request for Proposal' document were shared with the Qualified Institutional Buyers (QIBs) on 02.05.2019, inviting financial bid by 20.06.2019.  However, no financial bids were received.

The process was re-launched on 3rd February 2020 with issue of Preliminary Information Memorandum (PIM) and request for Expressions of Interest (EOI). The last date of submission of EoI was extended to 15.7.2020 due to prevailing covid-19 situation.

Three EOIs were received by the extended last date (15.07.2020). All the bidders were shortlisted by the TA. The Alternative Mechanism (AM) on 7.1.2021 approved the revised SPA and the revised RFP and authorized DIPAM to issue the revised RFP and revised SPA to the Transaction Adviser for further action, and issue any clarifications thereon if required. The approved RFP and SPA were shared with the Transaction Adviser (TA) for issuing to the short-listed bidders for placing financial bid, along with the proforma for obtaining Security Clearance.

The shortlisted bidders were given access to the Virtual Data Room (VDR) through which CEL provided comprehensive information to the qualified bidders who were also provided access to inspect the assets and facilities being offered as a part of the transaction. A large number of queries from bidders were responded to. After completion of the due diligence process, the TA issued the approved RFP and SPA along with the Security Clearance format to the short-listed bidders on 17.2.2021, with the last dated of submission as 10th March 2021. The final SPA contained detailed terms and conditions and the respective responsibilities to meet the conditions precedent for closing the transaction including release of Government guarantees prior to closing was agreed upon prior to bid submission.

The Last date of submission of financial bid was thereafter extended till 12th October 2021 due to disruptions caused by covid-19 and on the request from bidders. By the last date, two sealed bids were received along with non-financial bid documents and bid security from the two qualified bidders.

After receipt of sealed financial bids and in line with the approved procedure for strategic disinvestment, ‘Reserve Price’ of Rs 194 crore was fixed based on valuations by the Transaction Adviser (TA) and the Asset Valuer (AV) using respective methodologies as per the established process. After the independent fixation of Reserve Price, the already received sealed financial bids were opened in the presence of the bidders, which were as follows:

1. M/s Nandal Finance and Leasing Pvt Ltd for a price bid of Rs 210,00,60,000/- (Rs two hundred ten crore sixty thousand only)
2. M/s JPM Industries Ltd. for a price bid of Rs 190,00,00,000/- (Rs one hundred ninety crore only).

The higher of the two price bids price bid submitted by M/s Nandal Finance and Leasing Pvt Ltd was found to be above the reserve price.

The entire disinvestment process has been carried out in a transparent manner, with due regard to confidentiality of the bidders, through multi-layered decision making involving Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CDG) and the empowered Alternative Mechanism (AM) at the apex Ministerial level. Transaction Adviser, Legal Adviser, Asset Valuer as professionals in their respective fields, have supported the entire process.

The next step will be to issue the Letter of Intent (LoI) and then sign the Share Purchase Agreement following which, the conditions precedent would need to be satisfied by the successful bidder, the company and Government. It is expected that the transaction will be completed during current FY 2021-22.

8-Feb-2021: Disinvestment of Defence Sector DPSUs

Defence Public Sector Undertakings (DPSUs) set for disinvestment are BEML Ltd, Garden Reach Shipbuilders & Engineers Limited (GRSE) and Mishra Dhatu Nigam Limited (MIDHANI). The products being produced by them are as under:

Policy of disinvestment  of minority stake without transfer of management control is being followed for priority sector including defence CPSUs to unlock value, promote public ownership, to meet the minimum public shareholding norms of SEBI and for ensuring higher degree of accountability.  For non-priority sector where competitive markets have come of age, the policy of strategic disinvestment is followed.

3-Dec-2019: Government has given ‘in-principle’ approval for strategic disinvestment of 33 CPSEs

The Government has given ‘in-principle’ approval for strategic disinvestment of 33 Central Public Sector Enterprises (CPSEs) including subsidiaries, Units and Joint Ventures with sale of majority stake of Government of India and transfer of management control.

These include profit making as well as loss making CPSEs. Government follows a policy of strategic disinvestment of CPSEs, which are not in ‘priority sectors’ For this purpose, NITI Aayog has been mandated to identify such CPSEs based on the criteria of (i) National Security; (ii) Sovereign function at arm’s length, and (iii) Market Imperfections and Public Purpose. However, profitability/loss of the CPSEs is not among the relevant criteria.

The details of disinvestment targets set by the Ministry of Finance and achieved results each year over the last five years are as follows:

(in Rs. Crore)

Strategic disinvestment of CPSEs is being guided by the basic economic principle that Government should discontinue in sectors, where competitive markets have come of age and economic potential of such entities may be better discovered in the hands of strategic investor due to various factors such as infusion of capital, technological upgradation and efficient management practices. The success of the transaction depends on the prevailing market conditions and the investors' interest.

8-Jun-2022: Funding under Technology Development Fund scheme of DRDO enhanced to Rs 50 crore per project from Rs 10 crore

Raksha Mantri Shri Rajnath Singh has approved enhancement of funding under Technology Development Fund (TDF) scheme of Ministry of Defence to Rs 50 crore per project from Rs 10 crore. The TDF scheme, executed by Defence Research and Development Organisation (DRDO), supports indigenous development of components, products, systems and technologies by MSMEs and start-ups.

It may be recalled that 25 per cent of defence R&D budget was earmarked for private industry, start-ups and academia in Union Budget 2022-23. The enhanced funding is in line with the budget announcement and it will give further boost the vision of ‘Aatmanirbharta in defence’.

The TDF Scheme aims to provide a major fillip to the defence manufacturing sector by encouraging the industry to innovate and develop defence technologies in order to place India on the self-reliance trajectory. The scheme facilitates up to 90 per cent of the total project cost and allows industry to work in consortium with another industry/academia. With the enhanced funding, the industry and startups will be able to develop more complex technologies for existing and future weapon systems and platforms. Till date, 56 projects have been sanctioned under TDF scheme.

13-Dec-2021: Technology Development Fund

37 projects costing Rs191,19,28,932/- have been awarded to various industries specially MSMEs and start-ups under Technology Development Fund (TDF) scheme since its implementation. Total fund of Rs 28,51,45,680/- has been released to various Developing Agencies (DA) till date.

One product has been accepted by Indian Air Force and many other technologies are in advanced stages of acceptance by the Tri-Services & Users.

In 2021, Acceptance of Necessity (AoN) for 11 systems at a total cost of Rs 24,711 crore has been accorded for induction in the Services.