State-run iron ore company National Mineral Development Corporation (NMDC) on Tuesday said its board of directors has approved the demerger between NMDC Ltd and NMDC Steel Ltd.
The demerger is subject to regulatory approvals.
"This is to inform you that the Board of Directors of NMDC Ltd, at its meeting held today, July 13, 2021, has approved the Scheme of Arrangement for Demerger between NMDC Ltd and NMDC Steel Ltd ('Resulting Company') and their respective shareholders, pursuant to Sections 230 to 232 and other applicable provisions of the Companies Act, 2013," the NMDC said in a regulatory filing.
NMDC Ltd is a government company and is engaged in the exploration of wide range of minerals including iron ore, copper, rock phosphate, limestone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, and beach sands.
NMDC Steel Ltd is a wholly-owned subsidiary of NMDC, and currently does not have any business operations. It is authorised by its Memorandum of Association to carry on the business of, amongst others, manufacturing, prospecting, raising, operating, buying, selling, importing, exporting or otherwise dealing in various categories of steel and iron ore.
"'Demerged Undertaking' is defined under the scheme to means the business of NMDC Iron & Steel Plant at Nagamar ('NISP'), Chhattisgarh, including without limitation, the assets and liabilities described in Schedule I annexed to the scheme on a going concern basis. NISP is being constructed by the Demerged Company as part of its expansion and value addition to act as a facilitator and developer for the steel plant," it said.
The Demerged Undertaking would be vested with NMDC Steel Ltd pursuant to the demerger. The entire share capital of the NMDC Steel Ltd held by the NMDC Ltd would be cancelled and new equity shares of NMDC Steel Ltd would be issued to all the shareholders of NMDC Ltd in the same proportion.