State-owned steel making company Rashtriya Ispat Nigam Ltd?s (RINL?s) plan to go public is unlikely to fructify this year, putting further pressure on the government move to mobilise R40,000 crore from disinvestment proceeds this year.
According to a senior steel ministry official, RINL is yet to start the exercise on its equity restructuring that needs to be completed before the market offering. This may take some time and so, the company might not be able to complete all the formalities to launch the issue this year, said the official.
?They (RINL) had appointed IDBI (Industrial Development Bank of India) to prepare the report on their equity restructuring. It has submitted its report to the company. However, we are yet to hear a word from RINL. They would review and rework the report before sending it to the ministry. This would take time,? the official, who did not want to be named, said.
RINL, at present, has an equity base of R8,000 crore. It wants to transfer R7,000 crore to reserves, so as to maintain the same net worth even after reducing the equity to R1,000 crore. Company chairman and managing director P K Bishnoi had recently said in Kolkata that RINL was not comfortable having such a huge equity base and would like to keep only R1,000 crore as equity before going for a public issue.
The steel ministry official said: ?We do not want to give the impression that it (public issue) is not going to come this year. The work has just started and we have one-and-a-half years more to go,? he said.
RINL had obtained its ?navratna? status on the condition that the government-owned company would sell its around 10% stake and list itself on bourses. According to the norms, this has to happen within a period of two years and RINL has time till 2012-end to complete the listing formality.
In the present scenario, where steel prices are stagnant and stock markets are uncertain, steel companies would prefer to go slow on their public offers. Steel Authority of India Ltd (SAIL) too has already postponed its follow-on offer due to the unstable markets. The issue was scheduled to hit the market in the first quarter.
The government intends to raise R40,000 crore from disinvestment proceeds this year. So far, however, only one disinvestment proposal, that of PFC FPO, has sailed through, while proposals of SAIL, ONGC and others are waiting for right market conditions. Others who are likely to hit the market this year include MMTC, NBCC, HZL and IOC.