The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the issuance of fresh equity of up to 15% by state-owned Hindustan Copper Ltd (HCL) that would reduce the government shareholding to 66.13%.
The approval will help the copper miner to raise around Rs 901 crore. The proceeds will be used to meet the Kolkata-based company’s expansion and capital expenditure plans, according to a government statement.
HCL will issue 138,782,700 equity shares of face value of Rs 5 to the extent of 15% of paid-up equity capital through qualified institutional placement (QIP) route. At the current market price, HCL can raise around Rs 900.6 crore through the proposed fresh equity issuance.
As per Securities and Exchange Board of India (Sebi) norms, public sector units were to have a minimum public shareholding of 25% by August 21, 2017, which was later extended by a year. With the deadline approaching, the government is looking for ways to reduce its shareholding to adhere to Sebi guidelines.
As per a PTI report, the finance ministry was earlier contemplating to transfer government shareholding in about 10 public sector undertakings (PSUs) to “Special National Investment Fund” to meet the Sebi norm, as it may not possible to sell the stake in the prevailing market conditions.
According to a company official, with the Cabinet approval, HCL will now look to tap the market to raise funds.
The approval will help in reducing the central government’s shareholding in HCL from 76.05% to 66.13%. The paid-up share capital will also increase from Rs 462.61 crore at present to Rs 532 crore.
A press release by the government states that the “raising of funds is essential for HCL's expansion plans”.
The mini-ratna, with a market cap of Rs 6,004.66 crore, is targeting a production level of around 1.90 lakh tonne of metal in copper concentrate, which will meet around 30% of the refined copper demand of the country. The proposed expansion plan would create employment opportunities for 9,300 persons approximately, the release further said.
The miner has been looking to ramp up its smelting capacity to 100,000 tonne per annum from the existing 70,000 tonne. It is also targeting a turnover of ?2,000 crore by the end of this fiscal year.
Shares of the company on Wednesday closed at Rs 64.90 per scrip on BSE, up 7.99% from the previous close.
...& ANALYSIS
- Rs 901 crore HCL likely to raise via QIP
- 66.13% The government’s share in the copper miner will come down to after the share sale from 76.05%
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