PMO for PSU Ferro Scrap strategic sale over merger with SAIL

New Delhi. The Prime Minister's Office has spiked the Steel Ministry's proposal to merge the Ferro Scrap Nigam Ltd (FSNL) with country's largest state-owned steel maker, Steel Authority of India Ltd (SAIL), favouring strategic sale of the miniratna public sector company to expedite the disinvestment process and improve realisation for the exchequer.

 

FSNL currently operates in SAIL plants for extraction of metal slag and handling and processing of scrap. Due to the inherent synergy in their operations, the Steel Ministry was pushing for the merger of FSNL with SAIL. The steel maker itself had shown interest in the merger that would have made its expansion plan seamless as an important activity in the steel-making chain would have come under its umbrella.

 

"The PMO has favoured strategic sale of FSNL over its merger with SAIL to expedite the disinvestment process that has not covered any ground ever since October 2016, when the Cabinet Committee on Economic Affairs (CCEA) approved sale of 100 per cent government equity in MSTC, the parent entity of FSNL, to a strategic buyer. The concern is also that SAIL is itself under stress due to sluggish steel market with low prices and demand and any merger exercise would not only add stress on the steel maker, but government would also not realise good value for its shares," said a government source privy to the development.

 

The plan in favour of a strategic sale than a merger would be a big embarrassment for steel giant SAIL as FSNL is relatively tiny in size and operations compared to the large scale of operations of SAIL. The integrated steel player has acquired various smaller units in past without facing any major difficulty. But owing to market conditions, the going has been tough even for SAIL. It needs to be seen whether SAIL would be given an opportunity to pick up entire government stake in FSNL.