Auction’s back — for Hind Copper

Thought the government wouldn’t touch share auction option with a barge pole after the ONGC fiasco? Turns out that route’s still open and could well be used for Hindustan Copper.

“There is a good possibility of auction happening. But the call is of the Department of Disinvestment. I am not the right authority to comment on this, but there’s a good chance,” Shakeel Ahmed, chairman-cum-managing director, Hindustan Copper.

In March, the government had to bring in Life Insurance Corporation of India to bail out ONGC’s share auction after it received a tepid response during an institutional placement programme.

While market watchers blamed a greedy government, mispricing and lack of proper planning, the government denied forcing LIC to pick up unsold shares just before the auction came to a close.
The government has revived efforts to divest stake in some PSUs, including HCL where it owns close to 99.5%, much higher than the Securities and Exchange Board of India’s approved limit of a maximum 75% promoter stake.

The state-owned miner had earlier decided not to go for a follow-on public offer, telling the government that it doesn’t need money from share sale to meet its investment requirement.

“Department of Disinvestment has  circulated a draft Cabinet note as part of internal consultation process. After taking the views of the stakeholders, they will be put up to the Cabinet, which will then decide on disinvestment. But as on date no formal approval has come,” said Ahmed.

HCL will meet the gap between capital expenditure needed to complete its current mines development programme and its internal resources through external commercial borrowings of around Rs200 crore. “As per our earlier projections, we would have had a shortfall of Rs200 crore in FY13-14. Factoring in some delays in our projects which has happened this funding gap may appear in FY14-15 instead, which will met through ECB,” he said.

The country’s sole integrated copper mining company plans to invest close to Rs4,600 crore over three years to boost its production capacity from 3.4 million tonne now to 12 million tonne.