10% more NMDC sale likely

The government is expected to divest more of its stake in mining major NMDC, which is set to make a follow-on public offer, or FPO, sometime this fiscal.

The FPO, the company’s second — the first was in 2010, when the government had divested 8.4% stake for around Rs10,000 crore, bringing down its holding to 90% — is expected to mop up about Rs6,500 crore this time around.

Sources said the government could knock off another 10% or so in the latest FPO, though the divestment plan is still getting final touches from the finance ministry.

“Technically, going by Sebi regulations, the government can divest up to 15% more,” said S Thiagarajan, NMDC’s director – finance.
He, however, said there was no communication or order to this effect yet. “We are yet to hear anything on that and the issue of disinvestment is a prerogative of the government.”

Thiagarajan refused to hazard a guess on the exact quantum of disinvestment or the funds to be raised.

Market sources, however, doubt the issue will sail through in the current market environment.

“Irrespective of the timing of the disinvestment, there is no certainty over subscription. Despite being a strong player in its segment, NMDC had to depend on other public sector companies for bailing out its first round of disinvestment. Even this time, one has to keep his fingers crossed,” a source said.

Besides NMDC, the government is expected to look at BHEL and Hindustan Copper for disinvestment this fiscal. According to a Reuters report, the government aims to raise around Rs3,500 crore and Rs2,900 crore, respectively from these two offers.

The entire disinvestment process is estimated to yield Rs30,000 crore for the exchequer this fiscal, the bulk of which would go towards bridging fiscal deficit.