The Centre is likely to seek financial bids for NMDC Steel (NSL) later this month as its looks to complete the strategic sale of the company by September.

At present, the government holds a 60.79 per cent stake in NSL, which is the steel manufacturing facility of India's largest iron ore producer NMDC, with the plant at Nagarnar, Chhattisgarh.

It plans to divest its 50.79 per cent shareholding in NSL along with management control to a strategic buyer through a two-stage competitive bidding process.

Sources said the strategic sale of NMDC Steel is estimated to fetch around Rs 11,000 crore to the government — the second selloff in the sector after Neelachal Ispat Nigam Ltd last year.

Earlier this year, the Centre said it had received multiple expressions of interest for NMDC Steel.

Tata Steel, Jindal Steel and Power, JSW Steel, Adani Group and Vedanta Group are likely to have bid for the government’s stake in the company.

“Multiple Expressions of Interest (EoI) received for the Strategic Disinvestment of NMDC Steel Ltd (NSL). The transaction will now move to the second stage,” the Department of Investment and Public Asset Management (Dipam) said in a tweet.

Analysts expect stiff competition during bidding as growing urbanisation, coupled with rising income levels of the burgeoning middle class will drive infrastucture development that in turn will ramp up the demand of the alloy.

Besides, the government is likely to place big orders with the steel companies when it starts some of its infrastructure development programmes such as Housing for All, Bharatmala, Smart Cities along with the development of freight corridors and the expansion of railway networks and shipbuilding.

Rating agency Icra said domestic steel demand is expected to clock a double-digit growth of around 11.3 per cent in 2022-23 following an 11.5 per cent growth in the previous year.

The growth in consumption remained strong throughout 2022-23, supported by the government’s push for infrastructure-led economic growth.

With the central government’s capex outlay poised to increase 37 per cent in 2023-24, Icra has revised its estimate for steel consumption for the fiscal to 7-8 per cent from 6-7 per cent.

The steel plant — which is yet to be commissioned — at Nagarnar near Jagdalpur in Chhattisgarh has capacity of 3 million tonnes.

According to the bid document, NSL has invested Rs 21,000 crore in the plant.The project cost has been met through a mixture of debt and equity, it added. “NMDC has also executed loan agreement with State Bank of India for Rs 4,476 crore, to part-finance the balance project cost,” the document stated.

Since the majority of capex incurred so far on the plant has been funded through internal accruals, the plant is mostly debt-free. "Accordingly, the buyer will get an opportunity to acquire plant with no major issues such as accumulated losses,” the document said.