RINL IPO likely to be postponed till FY13

Disinvestment in Rashtriya Ispat Nigam (RINL) is likely to be postponed to 2012-13 after it completes the Rs 12,500-crore first phase expansion by the end of this fiscal which will improve valuation of the company.

The IPO of the Navratna firm, in which the government is considering to divest 10% its stake, was earlier being planned for January-March quarter of this fiscal.

"Valuations of the company will improve post expansion of our steel unit at Vizag, which is scheduled for commissioning in January-February next year. So, we are targetting to come out with the IPO of RINL only in the first quarter of next fiscal," said a senior company official.

Meanwhile, the company has initiated the IPO process and appointed four merchant bankers --UBS Securities, Deutsche Bank, Edelweiss Capital and IDBI Capital-- as the book running lead managers (BRLMs) to manage its issue, he said.

The second largest steel PSU has embarked upon a major capacity expansion drive to have a capacity of 11.5 million tonnes per annum (MTPA) by 2015-16 at an investment of Rs 45,000 crore. The expansion is to be completed in three phases.

Of this, phase-I is slated to be commissioned in January-February of next year, taking the production capacity of RINL to 6.3 MTPA from existing 2.9 MTPA, at a cost of Rs 12,500 crore.

The company is looking to increase its valuation before hitting the markets, the official said.

"The company has time till November 2012 to fulfill the guidelines of being a Navratna company. So listing of our company on the stock exchange can be done anytime before that and we are not in a hurry," he added.

Pointing out the current market conditions, the official further said that time was not ripe for coming out with the IPO and there was no pressure either from Disinvestment Department or from the Steel Ministry on this front.

"Every company looks for favourable conditions before coming out with its issue; we are also looking for the same," he said, adding that preparation for the IPO and securing government and other regulatory clearances will take 4-5 months time.

In 2010-11, RINL had posted a sales turnover of Rs 11,517 crore, while during this fiscal it is targeting a turnover of Rs 13,600 crore. The Navratna firm is a zero debt company and is sitting on cash reserves of Rs 5,500 crore.

As of March 31, 2011, the company has a paid up capital of Rs 7,827.32 crore. This comprises Rs 4,889.85 crore paid-up equity capital (4,88,98,462 shares of face value of Rs 1,000 each) and Rs 2,937.47 crore preference capital.