Rashtriya Chemicals and Fertilisers follow-on offer likely next fiscal

State-owned Rashtriya Chemicals and Fertilisers (RCF) plans to apply to the government for a follow-on public offer (FPO) by the fourth quarter of this fiscal and hit the market in the next, R G Rajan, chairman and managing director, said on Friday.

“While it will be government’s decision to decide how much equity to dilute, we will be approaching the government for an FPO soon and would like to hit the markets by 2012-13,” he said.

Currently, only 7.5% of the company is held by the public and it needs a further 12.5% dilution to meet the norms laid down by the market regulator for public sector undertakings. However, the FPO could see 15-20% stake diluted.

It will be pure government dilution and there will be no fresh infusion of equity by RCF as it doesn’t need to raise capital for its expansion plans, said Rajan. “We have cash of over `600 crore and it is expected to increase further in the next coming years so all our equity requirements could be easily met through internal accruals.”

One of the most ambitious projects the company has undertaken is of coal gasification, which will be forward integrated to produce urea for RCF.

The company, in association with GAIL and Coal India, will set up a coal gasification unit at Talcher in Orissa, with an outlay of Rs8,000 crore. “While Rs2,000 crore will go into upstream business of production of syn gas from the project, the downstream business will involve production of ammonia, nitric acid and urea and will require the rest,” said Rajan.

The company will be floating global tenders in the next two months and the ground work for the project is expected to start in 18 months.

The project is expected to be ready over the next three years and will produce 3,500 metric tonnes of urea.