Strategic disinvestment in Ferro Scrap Nigam Limited approved by Govt.

The government of India has approved 100 per cent strategic disinvestment in the central public-sector enterprise Ferro Scrap Nigam Limited. The government also approved the highest bid of Rs 320 crore of the Japanese company Konoike Transport Co. Ltd for Ferro Scrap Nigam Limited. 

In 2016, the central government's Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval for a strategic investment in Ferro Scrap Nigam Limited through a two-stage auction process. 

100 per cent disinvestment in Ferro Scrap Nigam Limited

The government-owned MSTC Limited will sell its 100 per cent equity shares in Ferro Scrap Nigam Limited to the Japanese company  Konoike Transport Co. Ltd for Rs 320 crore. 

Ferro Scrap Nigam Limited's management control will also be transferred to the Japanese company Konoike Transport Co. Ltd.

About Ferro Scrap Nigam Limited

Ferro Scrap Nigam Limited was established in 1979 as a subsidiary of MSTC Limited under the Union Ministry of Steel. FSNL specialises in the recovery and processing of scrap from slag and refuse generated during iron and steel making across different steel plants.

The company's headquarters is in Bhilai, Durg, Chhattisgarh.

What is Disinvestment?

Disinvestment refers to selling equity shares by a company's owner to other investors or the public.  In the Indian context, disinvestment is mainly used in the context of selling of equity shares by the government in its company.

The disinvestment may or may not lead to privatisation. Privatisation of a government company will take place only if the government sells 51 per cent or more equity shares of its company and transfers management control to the public or other companies.

What is Strategic Disinvestment?

The government of India introduced a strategic disinvestment policy for the central government’s companies in 2021-22.

The strategic disinvestment policy covers the Central Public Sector Enterprises, Public Sector Banks, and Public Sector Insurance Companies.

The central government companies have been divided into strategic and non-strategic sectors.

Strategic Sector 

Four sectors under the strategic sectors are 

• Atomic energy, Space and Defence
• Transport and Telecommunications
• Power, Petroleum, Coal and other minerals
• Banking, Insurance and financial services

The government will maintain a bare minimum presence in these sectors. The other government companies will merge with other central government companies or be privatised. The central government will decide which are to be privatised or merged.  

Non Strategic Sector 

Those sectors that are not in the strategic sector will fall under the non-strategic sector. Government companies operating in the non-strategic sectors will either be closed or fully privatised. 

Disinvestment Target for 2024-25 

The Indian government has set a disinvestment target of Rs 50,000 crore in the 2024-25 fiscal year.

In 2024-3-24, the government of India initially set a disinvestment target of Rs 51,000 crore, but it was later revised down to Rs 30,000 crore.