Govt. Rs 30,000Cr dis­in­vest­ment starts with Hin­dus­tan Cop­per

Business Sphere - - Disinvestment - By Our Cor­re­spon­dent

ick-start­ing the dis­in­vest­ment process of this year, the government has sold 5.58 per cent stake in Hin­dus­tan Cop­per for about Rs 808 crore at an av­er­age price of Rs 156.56 a piece. How­ever, a clutch of state-run banks and in­surer, LIC, had to pitch in to save the day for the government. But, that did not de­ter the Fi­nance Min­is­ter P Chi­dambaram to feel en­cour­aged. En­thused by the re­sponse to the first stake sale in the cur­rent fi­nan­cial year, he ex­pressed the hope that the government would be able to gar­ner the tar­geted Rs 30,000 crore in 2012-13 through dis­in­vest­ment. The government had planned to di­lute its stake by 4 per cent in the cop­per ma­jor through of­fer-for-sale route, with an op­tion of sell­ing an ad­di­tional 5.9 per cent and set the floor price at Rs 155 a share. How­ever, the is­sue re­ceived bids for 5,16,11,858 shares, rep­re­sent­ing 5.58 per cent stake in the com­pany, at an av­er­age price of Rs 156.56 per share. “The ap­prox­i­mate gross re­ceipts from the is­sue amount to Rs 800 crore,” said an of­fi­cial re­lease. Af­ter share sale, government’s eq­uity in Hin­dus­tan Cop­per has come down to about 94 per cent. Bulk of the eq­uity, ac­cord­ing to mar­ket sources, was picked up by Life In­surance Cor­po­ra­tion (LIC) and State Bank of In­dia (SBI) as the ini­tial re­sponse from the in­vestors was luke­warm. The share sale took place on sep­a­rate win­dows of stock ex­changes -- BSE and NSE. The is­sue con­tin­ued to get sub­dued re­sponse in the bourses with bids worth Rs 31.40 crore re­ceived in the first three hours as against an over­all tar­get of up to Rs 1,376 crore. The of­fer for sale of Hin­dus­tan Cop­per shares, which started at 9.15 am, had re­ceived to­tal bids for 20,25,835 shares or 2.28 per cent of the to­tal of­fer, which are worth Rs 31.40 crore at the floor price of Rs 155 per share, till 13.15 pm. Dis­in­vest­ment Sec­re­tary Haleem Khan said in­sti­tu­tional in­vestors par­tic­i­pated in the is­sue, but did not give fur­ther de­tails. “We went to the mar­ket with 4 per cent and got bid for 5.58 per cent. I don’t think it can be con­sid­ered as fail­ure. I think I should be con­sid­ered as good success keep­ing in view the mar­ket con­di­tions...(and) shares are illiq­uid,” Khan said. “A to­tal bid for 5,16,11,858 shares was re­ceived. It has been de­cided to ac­cept the en­tire num­ber of shares bid for at or above the floor price. Thus, ap­prox­i­mately 5.58 per cent of the to­tal paid up share cap­i­tal of HCL stands di­vested through this is­sue,” he added. Shares of Hin­dus­tan Cop­per, how­ever, tanked 20 per cent to hit its lower cir­cuit limit on BSE. Fol­low­ing the slump in the share price, mar­ket cap­i­tal­i­sa­tion of the com­pany shrunk by a whop­ping Rs 4,925 crore to Rs 19,711 crore. The Hin­dus­tan Cop­per is­sue was very cru­cial for the government as it sets the tone for the government’s dis­in­vest­ment pro­gramme of Rs 30,000 crore which it aims to com­plete in less than five months of the cur­rent fi­nan­cial year. The dis­in­vest­ment process is im­por­tant for the government to meet its 5.3 per cent fis­cal deficit tar­get, par­tic­u­larly in the face of grow­ing trade deficits. Chi­dambaram said, “We will go for­ward with the dis­in­vest­ment pro­cesses as ap­proved by the CCEA be­tween now and March...I hope that we can col­lect the tar­geted Rs 30,000 crore.” Khan said dis­in­vest­ment of 10 per cent stake in NMDC was likely to take place in first half of the next month. “NMDC dis­in­vest­ment should be in the first fort­night of De­cem­ber... They have es­ti­mated about Rs 7,000 crore. Let’s see,” Khan said. The government has listed out a num­ber of state-run firms for the dis­in­vest­ment process for the cur­rent fis­cal which in­cludes NMDC, OIL In­dia, Nalco, NTPC and a clutch of oth­ers.

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