NMDC, REC boards give nod to follow-on offer

Written by fe Bureaus | Hyderabad | Updated: Jan 27 2010, 03:59am hrs
The boards of state-owned firms National Mineral Development Corporation (NMDC) and Rural Electrification Corporation (REC) have approved the filing of their respective draft red herring prospectus with Sebi for their follow-on offer. The NMDC has proposed to divest 8.38% of the government stake and expects to mop up Rs 20,000 crore from the public. The company has posted a net profit of Rs 859.99 crore for the quarter ended December 31, down 40% as against last years profit of Rs 1,424.95 crore.

The government is planning to complete the FPO by the end of this fiscal. An empowered group of ministers in early March will decide the issue price for the FPO which could be launched during March to mobilise Rs 20,000 crore. Besides, the government has also appointed book runners-cum-lead managers comprising Citigroup, Kotak Mahindra, RBS Equities, UBS Securities, Morgan Stanley and Edelweiss Capital to advice it on the FPO programme. The government will be using the entire NMDC proceeds to part fund its various social and infrastructure programmes.

REC is likely to hit the capital market with FPO next month. The company is hoping to raise Rs 3,300 crore through 20% share sale. The offer would comprise 5% stake dilution by the government and issuance of 15% fresh equity. Post-FPO, the government's share in REC would come down to nearly 66% from present 81.82%. The company, engaged in financing power projects, had posted 48.58% jump in net profit at Rs 474 crore for the quarter ended December 31, 2009.

The government, which holds about 98.38% share, would be divesting 8.38% of stake in the navratna company to fund its various social and infrastructure programmes. Meanwhile, NMDC said Sponge Iron India Ltd (SIIL) has merged with NMDC. An order to this effect was passed by the Ministry of Corporate Affairs (MCA).