State-run miner KIOCL has asked the government to defer its disinvestment plans for now saying part share sale in the PSU may not fetch good returns due to its limited operations.
The Chairman and Managing Director of KIOCL, Malay Chatterjee, in a letter to the Steel Ministry has said: “There is no bright operational and growth scenario of the company. The shares of the company, if divested, will not fetch any good return to government in this juncture.”
“Hence, the proposal for disinvestment may be deferred till the time the company acquires an active mining asset and shows positive result,” he said in the letter.
The Department of Disinvestment is considering share sale in KIOCL, which is engaged in production and export of iron oxide pellets and supply of pig iron for domestic market, in the fiscal. The government plans to raise Rs 40,000 crore through disinvestment in the current fiscal, up from Rs 23,920 crore in 2012-13.
KIOCL, formerly known as Kudremukh Iron Ore Company, does not have any mining asset at present. The ‘Mini Ratna’ PSU under the Steel Ministry is operating iron oxide pellet plant and blast furnace unit at Mangalore, Karnataka.
Due to a subdued market condition and non—accessibility of iron ore, the 3.5 million tonnes per annum Mangalore pellet plant could remain operational for 140 days last fiscal.
“Further, the stoppage of mining operation in Karnataka due to a ban by the apex court compelled the company to source its ore from NMDC, Chhattisgarh, incurring an additional expenditure of about Rs 1,000 per tonne on logistics due to longer distance,” Chatterjee said in the letter.
Also, KIOCL has stopped export of pellets in spite of being a 100 per cent export oriented unit due to imposition of distance-based charge by the Railways for iron ore.
The government holds 99 per cent stake in KIOCL and shares of the company are listed on stock exchanges of Madras and Bangalore.
KIOCL is a debt-free company and having more than Rs 1,400 crore as bank deposits.