Narendra Modi government cracks down on steel PSUs, orders shedding of non-core assets


The government wants PSUs under the steel ministry such as SAIL and NMDC to divest their non-core assets and concentrate on their core competencies. These firms will also be asked to devise a policy for future investment concentrating on value-added products, as per the draft national steel policy (NSP), 2017. “In the current scenario, steel-making CPSEs need to not only compete with private integrated steel players and cater to the requirements of the MSME steel sector but are also required to be globally competitive. In order to provide economies of scale, CPSEs will be encouraged to increase focus on their core competencies and divest their non-core assets,” it said.

The draft policy said CPSEs have primarily focused and invested more in brown-field expansion of similar steel capacity with limited value addition in terms of high-end product development so far.

Talks on selling non-core assets for SAIL have been going on for quite sometime now. However, barring divesting stake in a cement unit to its joint venture partner, progress has not been significant. It is now on the look out for buyers for its three loss-making arms for a strategic disinvestment.

NMDC is building a 3 mtpa steel plant. Talks were earlier there in the ministry that it should not have any business to be in steel-making.

Meanwhile, the draft policy said, “The ministry will encourage the CPSEs to develop a policy for future investment, so that impetus could be given for development of value-added steel capacity and adoption of latest technologies at par with global best practices.”

It says CPSEs will also be encouraged to take leadership role in development of the industry, adopt a more inclusive business model, increase their CSR spend, among others.