Time for SAIL, NMDC to shop abroad

The global softening in commodity prices triggered by the collapse of financial institutions in the West in the second half of 2008 may have just opened a window of opportunity for cash-rich public sector undertakings like NMDC and SAIL to go shopping abroad, says a report. HT Correspondent reports.

The global softening in commodity prices triggered by the collapse of financial institutions in the West in the second half of 2008 may have just opened a window of opportunity for cash-rich public sector undertakings like NMDC and SAIL to go shopping abroad, says a report by consulting firm PricewaterhouseCoopers.

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Each of them has more than Rs 10,000 crore as cash in their books.

A PwC study on mining deals of 2008 reveals that the mining industry, “Experienced a violent downward tailspin in the last three months of 2008 which has turned much of the deal making in the sector upside down.”

After over two years of boisterous activity in deal making in the global mining sector the situation cooled up in 2008 to post a 4 per cent drop over 2007.

The average value of deal also softened by 11 per cent.

A comparison of mining deals further revealed that the industry remained upbeat till the third quarter with consolidation activity remaining significantly higher than the previous year. However things came to a shuddering halt in the last quarter with deal value falling to $19.7 billion during the quarter ended December 2008 over $44.6 billion in the same quarter previous year.

This is where PSUs like NMDC and SAIL will hold advantage with their high cash reserves.