• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Mr P.K. Rastogi, Steel Secretary

Our Bureau

New Delhi, Aug. 4 The Government has taken an important step towards disinvestment of an 8.38 per cent equity stake in the iron ore producer NMDC with the Steel Ministry recommending the stake sale to the Department of Disinvestment in the Finance Ministry.

This transaction — if carried through — will help the Government mop up at least Rs 12,000 crore going by NMDC’s Tuesday’s closing price of Rs 367.95 on the NSE.

“This will help us meet the SEBI norms on 10 per cent public holding for continued listing. The funds will accrue to the Government,” Mr P. K. Rastogi, Secretary, Ministry of Steel, told Business Line when contacted.

SEBI had earlier, as a special case, allowed NMDC to list its shares on the stock exchanges though the Centre’s holding in the company was over 98 per cent.

The proposed divestment of 8.38 per cent will reduce the Centre’s holding from the current level of 98.38 per cent to 90 per cent.

On issues such as timing, pricing and the process of disinvestment, Mr Rastogi said the decisions will now be taken by the Department of Disinvestment.

“We have given the recommendation. The decisions on the specifics of the transaction will be taken by the Department of Disinvestment in consultation with us,” Mr Rastogi said.

Mr Rastogi made it clear that NMDC, which enjoys navratna status, does not have any immediate fund requirements and that the money raised through the sale will accrue to the Government.

Indications are that the Government will offload the 8.38 per cent through an offer for sale to the public. This will then be in line with the Government’s stated objective of ensuring people ownership of public sector undertakings while not allowing government equity to fall below 51 per cent.

In fact, the Finance Minister, Mr Pranab Mukherjee, had in his Budget speech, said that he would encourage people’s participation in the Government’s disinvestment programme.

Despite the global economic downturn, the domestic steel demand has held up well. This has benefited iron ore producers such as NMDC although the prices of iron ore have corrected over the last one year.

For the first quarter ended June 30, 2009, NMDC had recorded a net profit of Rs 773.75 crore on net sales of Rs 1,278.05 crore. The net profit was lower against the Rs 981.31 crore reported in the same quarter last year on net sale of Rs 1,673.15 crore.

The Steel Ministry has already recommended a sale of 10 per cent stake in Manganese Ore India Ltd, which is an unlisted entity.

The Government has kick-started its disinvestment programme with the NHPC initial public offering slated to hit the market in the next few days.

On Tuesday, the NMDC share closed at Rs 367.95 on the National Stock Exchange, up Rs 7.6 over the previous day’s close of Rs 360.35.

More Stories on : PSU | Disinvestment | Minerals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line