Japanese Firm Konoike Transport Wins Bid for Ferro Scrap Nigam Limited
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). FSNL is a subsidiary of MSTC Ltd under the Ministry of Steel and was established in 1979 to provide steel mill services, specializing in the recovery and processing of scrap from slag and refuse generated during iron and steel making.
The strategic disinvestment transaction was carried out through a two-stage open, competitive bidding process. The Ministry of Finance announced that the transaction now moves to the concluding stage, which includes issuing the Letter of Award, signing the Share Purchase Agreement (SPA), fulfilling the conditions specified in the SPA, and closing the transaction.
The 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 FSNL. Six interested bidders expressed their interest, and five were shortlisted as qualified bidders. After due diligence and security clearance, two sealed financial bids were received. The bid by Konoike Transport Co Ltd at Rs 320 crore was the highest and above the reserve price of Rs 262 crore.
Konoike Transport Co Ltd is a Japanese corporation listed on the Tokyo Stock Exchange, with over 140 years of experience in steelworks operations. The other bid was from Indic Geo Resources Pvt. Ltd., a subsidiary of Chandan Steel Ltd.
Doubts Revealed
Konoike Transport -: Konoike Transport is a company from Japan that helps move and manage goods and materials.
Bid -: A bid is an offer to buy something at a certain price. In this case, Konoike Transport offered Rs 320 crore to buy a company.
Ferro Scrap Nigam Limited (FSNL) -: FSNL is a company in India that helps recycle and process scrap metal. It is owned by another company called MSTC Ltd.
Union ministers -: Union ministers are important people in the Indian government who help make big decisions for the country.
Nitin Gadkari -: Nitin Gadkari is an Indian politician who works as a minister in the government.
Nirmala Sitharaman -: Nirmala Sitharaman is an Indian politician who is also a minister in the government.
HD Kumaraswamy -: HD Kumaraswamy is an Indian politician who has served as a minister and also as the Chief Minister of Karnataka.
Rs 320 crore -: Rs 320 crore is a large amount of money in Indian currency, equal to 3.2 billion rupees.
MSTC Ltd -: MSTC Ltd is a company in India that deals with trading and recycling of scrap materials.
Ministry of Steel -: The Ministry of Steel is a part of the Indian government that looks after the steel industry in the country.
Equity shareholding -: Equity shareholding means owning a part of a company. In this case, it means owning all of FSNL.
Scrap recovery and processing -: Scrap recovery and processing means collecting old metal and turning it into useful materials again.
Two-stage competitive bidding process -: This means there were two rounds where different companies made offers to buy FSNL, and the best offer was chosen.