Moil will be the second-biggest IPO after Coal India

Nagpur-headquartered Manganese Ore India Ltd (Moil), the largest manganese ore company in the country and a ‘mini ratna’, is all set to hit the capital market with the second biggest public sector initial public offering after the Rs15,200 crore Coal India issue, which opens today.

Moil would start its road shows from October 20 in Mumbai for a public offering which sources say expected to be in the range of Rs3,500-4,000 crore.

K J Singh, chairman and managing director, Moil, said he is not authorised to speak to the media before the launch of the issue, but confirmed road shows will start in late October and the IPO is expected to hit the market by late November.

Though the company has not disclosed its latest reserves potential, a reliable source said manganese ore reserves are between 62-65 million tonnes, which can be mined over the next 30-40 years.

Of this, over 22 million tonnes are proven reserves.

Manganese is used in value-addition during steel making.
These reserves are spread across 10 mines, six located in Nagpur and Bhandara districts of Maharashtra and four in Balaghat district of Madhya Pradesh.

While the Government of India holds 81.57% in the company, Maharashtra holds 9.62% and Madhya Pradesh 8.81%.

A source said through the public offering, the government would offload 10% stake and the state governments would offload 5% each.

The money raised will not come into the company, but go to the government.

According to the company’s 2009-10 annual report, Moil has the strength of holding almost 60% of total demonstrated reserves of ferro grade manganese ore in the country. It is also the largest producer of manganese ore in the country and accounts for about 50% of the country’s total production.

For the year ended March 2010, the company posted net sales of Rs965.47 crore and a profit before tax of Rs706.79 crore. It is a debt-free company with cash reserves of Rs1,500 crore. In the last fiscal, it sold 11.75 lakh tonnes of the ore against a targeted volume of 9.6 lakh tonnes.

As part of forward integration and to have an assured market for its ore, the company also has a 50:50 joint venture with Steel Authority of India Ltd for setting up a ferro alloys plant of 1.06 lakh tonnes per annum (tpa) capacity in Chhattisgarh.

It has a similar joint venture with Rashtriya Ispat Nigam Ltd  to set up a 57,500 tpa ferro alloy plant in Vizag.

In fact, it is the only government company after Coal India whose IPO has been assigned the top grade of 5 on a 1-5 scale.