State-owned Hindustan Copper has dropped its plan to raise capital by issuing fresh equity simultaneously with the government?s proposed stake sale in the company as rising copper price has enriched the company, highly placed sources told FE.

The follow-on proposal, which is now being reworked by the disinvestment department, will consist only of a government stake sale of 10%. The Kolkata-based company that is sitting on strong cash reserves due to soaring copper prices has no immediate need to raise funds. A senior official from the disinvestment department said, ?Ministry of mines has written to us stating that the company has no immediate fund-raising needs. So, we will go only for the 10% government stake sale now?.

The company got Cabinet nod for its FPO in June last year but the issue is yet to happen due to delay in the appointment of independent directors. The company will have to seek fresh approval from Cabinet Committee on Economic Affairs (CCEA) once the proposal is changed. The long-delayed share sale had originally envisaged divestment of 10% paid-up equity capital out of government?s shareholding along with issue of fresh equity of equal size by the company. The government now owns 99.6% of Hindustan Copper.

Hindustan Copper is an integrated copper producer involved in mining, smelting and refining of copper. Rising price of copper has helped the company earn huge profits and build up reserves. The company is sitting on cash reserves worth R450 crore and its net profit was up 45% in 2010-11 at R224 crore against the same period a year ago.

Shakeel Ahmed, chairman and managing director Hindustan Copper, told FE, ?We have no immediate need of funds for this fiscal. We?ll be requiring some funds in 2013-14.?

The company will tap external commercial borrowing to meet the extra fund requirements for its mining projects. The company is planning to set up a JV with the National Aluminium Co (Nalco) as part of its expansion plans.

The disinvestment department is planning to bring out two offers every month from September to meet its budget target of R40,000 crore. Even after getting delayed by several months, HCL is yet to reserve half of its board seats to independent directors. The company has only two independent directors whereas requirement is of seven. Capital market regulator Sebi requires any listed company’s board to have 50% of independent directors.