The much delayed initial public offer (IPO) of Rashtriya Ispat Nigam ltd (RINl), is likely to be deferred again and may even take place in the next financial year, as the company is still assessing the damage it had suffered due to the Hudhud cyclone which had hit Visakhapatnam on October 12, 2014. The company is headquartered in the east coast city and its plant is situated there.
Though sources associated with the exercise indicated that efforts are on to bring it during the current fiscal, industry watchers pointed out that doing it before the March 31, 2015 deadline could be quite challenging, considering the damage suffered by the RINl plant at Visakhapatnam. The Government for quite some time has been trying to sell its 10 per cent stake in the company, however prior to this the exercise has been postponed earlier twice, owing to subdued condition of the markets and because of an earlier fire incident at the same plant. By divesting its stake in RINl, the Centre plans to garner around Rs 2,500 crore. “We want it to happen in this fiscal, and though the damage due to the cyclone is quite much, efforts are on to bring it within this financial year,” said a source close to the development.
RINl officials had informed The Pioneer shortly after the cyclone that the company was ready with the IPO plan and were only awaiting the directions from the Department of Disinvestment (DoD). They had even expressed confidence that the plant would be functional within two weeks. However, almost three months after the Hudhud cyclone ravaged Visakhapatnam, sources pointed out the damage is much more than was initially expected and therefore bringing in the IPO at this time may not be feasible.
Once the damages are assessed completely by the company, then fresh time lines may be prepared by the Government for bringing the IPO, sources said. RINl was forced to stop production at its lone facility at Visakhapatnam due to failure of power supply after the cyclone had unleashed its fury on the east coast city. According to estimates, the cyclone’s impact on State-run steel maker RINl’s profitability is expected to be about Rs 350 crore. In fact, sources had even exuded confidence while talking to this newspaper in October last year, that the RINl IPO may come before November 16, the day the Navratna status accorded to RINl was set to expire. The company is mainly looking to hit the capital markets to retain its Navaratna status, which had been accorded to it on November 16, 2010, on the condition that it would get listed within two years. The Government too is keen that RINl’s Navratna status remains and therefore is trying hard to bring the IPO in this fiscal.
In September last year, RINl had filed an offer document with Sebi for an IPO through which the Government will sell 10 per cent of its stake in it. Post the stake sale, Government’s holding will come down to 90 per cent in the company. RINl is also in the process of expanding its production capacity to 6.3 million tonnes per annum (mtpa) by the next fiscal, from the existing 3 mtpa.