Fresh equity not on plate in Hindustan Copper follow-on

Hindustan Copper, India’s biggest integrated copper miner, has decided not to go ahead with fresh infusion of equity in its proposed follow-on public offer (FPO) under the government’s disinvestment programme.

Shakeel Ahmad, chairman and managing director of the public sector company, said under the current approval from the Cabinet Committee on Economic Affairs (CCEA), Hindustan Copper has an approval to infuse 10% of additional equity, along with 10% divestment of government holding. The company was keen to go ahead with the fresh infusion some time ago, but now it has sought an approval to defer it, he said.

“We have considered various options for the funding of our projects and we have come to the conclusion that we can avoid the fresh equity part of the FPO,” said Ahmad.

He said approval for the same is currently being discussed at the CCEA level and the company will make a formal announcement when it gets a green signal.

For the current year, the company plans to start work on it’s seven mines and has set a target of taking up its production of copper ore from 3.6 million tonne per annum (mtpa) to 12 mtpa by 2016-17. “We have a capex of ¤3,677 crore over the next five years for achieving this output,” he said.

While last year, media was abuzz with reports that the company might hit the capital market very soon, Ahmad clarified that the company is currently not prepared to go ahead with the FPO due to regulatory issues.

“We have vacancies for five independent directors, for which a committee has already been formed. The committee will be meeting on July 25 to take a final call. After that it will take another two months to fill the vacancies,” said Ahmad, adding that by September end, the company will be ready to go ahead with the FPO process.

After that, it will be a decision of the Department of Disinvestment to take a final call on the timing of the company’s FPO.

Under the government disinvestment programme, the government has lined up nine companies that will hit the primary markets this year. Since, it will be difficult to bring in foreign investors during summer and winter breaks, most of the offers are expected to come in the five months of September, October, January, February and March, said media reports on Tuesday.

The government plans to raise close to ¤40,000 crore this year under its disinvestment programme, out of which the major players are ONGC and SAIL.