Hind Copper starts roadshows for second tranche sale

State-owned Hindustan Copper has begun roadshows for sale of the second tranche of the company’s shares held by the government.

Roadshows for prospective institutional investors have already taken place in cities like Chennai and an international roadshow is planned to be held in Singapore soon, said sources.

The share sale could happen in end-June or early-July, going by the timing of the roadshows.

The government, which owns 94% stake in Hindustan Copper, needs to raise minimum public shareholding to 10% by end-August to meet Securities and Exchange Board of India rules.

An Empowered Group of Ministers had approved offloading of 9.59% of government’s equity in two tranches in November but in an unfavourable market, only 5.58% stake could be sold at Rs 155 per share, that with the help of the Life Insurance Corporation.

Since then, the company’s shares have fallen to Rs 80.

Its fourth quarter performance hasn’t been encouraging either, with a drop in income to Rs 415 crore from Rs 686 crore year ago, though net profit jumped 37% to Rs 188 crore.

In the roadshows, Hindustan Copper management has pointed out risks related to expansion, re-opening and new mine projects, risk of delays and consequent rise in costs, likely delays in environmental clearances, mining leases and government approvals among others.

It is investing close to Rs 2,925 crore to boost its copper ore output capacity from the present 3.66 million tonne to 12.41 million tonne by expanding existing mines like Malanjkhand, Khetri, Kolihan and Surda, and reopening the closed Kendadih and Rakha mines, all by 2017-18.

Another Rs 510 crore would be spent on developing new mines like Banwas and Chapri-Sidheshwar.

The Kolkata-based PSU has applied for mining and prospecting licences in states like Jharkhand, Madhya Pradesh, Haryana and Rajasthan, the roadshow presentation noted.

Even as global prices of copper have remained under pressure mostly due to weak data from China and US’s housing sector, a key consuming sector for the metal, Hindustan Copper is banking on domestic demand. “Copper ore production in India for 2012-13 was 3.6 million tonne, meeting only 4% of the country‘s demand. This lack of sufficient supply of domestic copper ore has resulted in custom smelters relying on imported copper concentrate to feed domestic smelters,” the presentation said.