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The Government has approved divestment of 10 per cent of its stake in Rashtriya Ispat Nigam Ltd (RINL), the country's second largest public sector steel maker, through an initial public offer (IPO) in the domestic market.
The Cabinet Committee on Economic Affairs on Tuesday approved the RINL divestment, which may fetch about Rs 2,500 crore. The IPO is likely to be launched in the next financial year. RINL, which became a Navratna in 2010, needs to be listed within two years under the norms. This means the company's divestment process has to be completed by November 2012.
Capital restructuring
RINL had a paid-up capital of Rs 7,827.32 crore as of March 31, 2011. This comprised of Rs 4,889.85 crore of paid-up capital (4,88,98,462 shares of face value of Rs 1,000 each) and Rs 2,937.47 crore in preference capital. As the capital base is high compared to the company's size, a capital restructuring exercise is currently being undertaken.
The Government proposes to divest 10 per cent of the paid-up equity capital comprising 48,89,846 shares of face value of Rs 1,000 each out of its shareholding through a domestic IPO. In order to make the share more affordable to the investors, the Ministry of Steel and RINL plan to split the equity share of face value Rs 1,000 each into share of face value of Rs 10 each before the proposed divestment.
Capacity & Targets
RINL had a production capacity of 2.9 million tonnes a year (mtpa) and is in advanced stage of expanding it to 6.3 mtpa with an investment of Rs 12,300 crore. RINL registered a sales turnover of Rs 11,517 crore for 2010-11, an eight per cent growth over previous year. For the current year 2011-12, the company is targeting a turnover of Rs 13,600 crore, according to the MoU with the Ministry of Steel.
In the first six months, RINL has registered a five per cent increase in net profits at Rs 221 crore over corresponding last year. Total turnover for the period grew 28 per cent to Rs 6216 crore over corresponding last year.
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