Cabinet approves 10% disinvestment in NMDC

Cabinet approves 10% disinvestment in NMDCTaking a step forward to allow the government to raise funds by selling stakes in state-run companies to narrow its fiscal deficit, the Cabinet Committee on Economic Affairs (CCEA) on Thursday approved a 10 per cent stake sale of the government's equity holding in iron-ore producer NMDC Ltd.

The disinvestment in NDMC will be made through the `offer for sale of shares through stock exchange' route. The transaction is expected to fetch the government around Rs. 7,000 crore.

Currently, the government owns 90 per cent stake in NDMC - the country's largest iron ore producer, which is operating two mining complexes, one in Chhattisgarh and another in Karnataka.

This is not the first time that the government is going to sell its stake in NDMC. In March 2010, the Government had offloaded its 8.38 per cent in NMDC via a public offer.

NMDC, which had a paid-up equity capital of around Rs. 396.47 crore as of March 31, is mainly engaged in the ore mining business. But it has also started expanding its activities towards steel production and some other value-added products.

The government had proposed to divest its stake in NMDC earlier also, but it had to shelve the plan due to poor market conditions.

The government aims to generate Rs. 30,000 crore by divesting its stakes in various PSUs during the current fiscal, but uncertain market conditions has so far not allowed it to roll out any public issue.