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‘Delay' in follow-on equity offer may not affect Hindustan Copper Ltd's (HCL) expansion plans during the next two years. The Ministry of Disinvestment is yet to give the green signal for HCL's SEBI-cleared FPO.
Mr Shakeel Ahmed, CMD of HCL, told mediapersons here that the company's proposed seven expansion projects, including the Malanjkhand underground mine, may not be affected by the “delay” in Government decision over the equity issue.
He said the Malanjkhand project (in Madhya Pradesh) and six other expansion programmes might not require external funds, if the present joint venture proposal with Nalco, preparation for which was under way for the past few months, fructified.
Mr Ahmed said on Saturday that internal generation could fund all its projects at hand in this fiscal as well as in the next. Given the cash generation from the operations and the alternative plans for Malanjkhand, in 2013-14 the company would, however, need to bridge a resource gap of around Rs 207 crore. HCL had obtained SEBI nod in November last for a follow-on offer that included 10 per cent fresh equity issue and another 10 per cent divestment by the Government. The fresh issue proceeds were to be used partly for the planned seven projects and partly for the future projects, both domestic and overseas.
As a first alternative, the Malanjkhand project could be largely financed by the proposed joint venture with cash-rich Nalco. Under the agreed upon basic proposal, mining assets at Malanjkhand, valuation of which was being done now, would form the HCL equity in the proposed venture. This would obviate the need for any large funding.
The price realisation has been robust for HCL on the back of strong LME price trend in the past 18 months. “Short-term correction aside, this trend is likely to continue in this year and also in 2012. My personal call is this year the average LME copper price would be $9,200 a tonne and next year it could reach to $10,000. That would be a good going for our cash generation and, in turn, finding resources for the projects,” he said.
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