Hindustan Copper Ltd, the public sector mini-ratna company, has decided to hit the capital market next year with the government intending to divest 10% of its 99.59% holding. While the bank and financial institutions hold 0.09%, private & corporate bodies 0.05%, general public holds 0.27% of the entity.
Chairman and managing director Shakeel Ahmed told FE, ?Either the government?s 10% divestment will come back to Hindustan Copper for the company to issue a follow on public offer (FPO) or there may be an increase in the equity base for further 10% offloading to make a total offload of 20%.?
?The Hindustan Copper board discussed the issue on Wednesday and has given a nod to it. Now it is for the mines ministry and finance ministry and the department of disinvestment to decide on how Hindustan Copper Ltd will hit the capital market,? Ahmed said. ?We aim to get all the government approvals by March 2010 and hit the capital market early next fiscal,? he added.
Although he did not want to specify the amount Hindustan Copper planned to raise, he said, ?We want to use the proceeds to part finance the company?s plan of increasing copper ore production from 3 million tonne (mt) at present to 11.4 mt by 20014-15.?
The expansion would cost Rs 3,500 crore and the company doesn?t plan any debt funding for it. Besides the proceeds, the firm would also use its internal accruals to fund the expansion, Ahmed said.
While 2008-09 was a bad year for Hindustan Copper, which posted a net loss of Rs 10.3 crore, it has seen a revival of sorts for the third quarter of 2009-2010 posting a net profit of Rs 14.46 crore.
Since the London Metal Exchange governs the price of copper, both in international and domestic market, the global meltdown hit Hindustan Copper hard, Ahmeda said.
Copper prices fell from a peak Rs 8,400 per tonne to Rs 3,000 per tonne. The prices have, however, started recovering and are currently at Rs 7,000 per tonne with the revival of demand in China. The trends indicate that the prices of copper would stabilise to somewhere at Rs 6,000 per tonne and this would continue for quite sometime, he added
Stock prices of Hindustan Copper have moved up from its low of Rs 74 to hover at around Rs 282-284 at present.
Before hitting the market, the company would emphasize on improving its fundamentals. It is concentrating on increasing the copper ore productivity from 3 mt at present to 3.2 mt from its existing resources by the fiscal-end.
Besides, the tenders for further developing the Malanjkhand and Khetri mines have already been finalised and the tender for Banwas mines would be finalised within this year. The company would shortly float tenders for Kolihan and Chaprasidheswar mines, he said.
He said for a better price realisation the company has started giving equal importance to small and big customers and has adjusted the discount on the premium at the top of the LME prices from a level of 0-120% to 30- 80%. ?All these will surely improve the company?s fundamentals,? he added.