Steel ministry’s no to defer divestment

By SNV Sudhir

Visakhapatnam, July 3, 2012: With no reprieve from Ministry of Steel on the proposed disinvestment in the form of Initial Public Offering (IPO), the management of RINL-VSP, which is limping back to normalcy after the blast on June 13, is gearing up to hit the roadshows.

The plea by the management to defer the IPO plans, at least for sometime, was said to have been struck down by the steel ministry.

After the high power blast at VSP killed 19 persons on June 13, and pressure from workers unions, RINL management wrote to steel ministry a few days back to withhold IPO for sometime, which was rejected, highly placed sources told this newspaper.

RINL management is now planning various roadshows in prime cities in the country and abroad to promote the IPO.

The IPO was supposed to hit the capital markets in July, starting the government’s Rs.30,000-crore divestment programme for the current fiscal. By diluting its 10 per cent stake in RINL, the government has aimed to raise about Rs 2,500 crore. The Cabinet Committee on Economic Affairs in January had approved disinvestment in RINL.

The company has appointed four merchant bankers - UBS Securities, Deutsche Bank, Edelweiss Capital and IDBI Capital - as the lead managers for the IPO.

Earlier, RINL management deferred road shows due to volatile market conditions. VSP is on an ambitious expansion plan to enhance its capacity from the existing three million tonnes to 6.3 million tonnes at a cost of Rs.12, 291 crore.

Meanwhile, workers unions of RINL served a strike notice to the management on June 28 in protest against the proposed disinvestment.

The unions have threatened to go on a strike on July 31 and August 1 in protest against the proposed dilution of 10 per cent equity. All the unions served the notice.

“We will not hesitate to go on an indefinite strike if the ministry doesn’t shelve the IPO plan. VSP is one of the very few profit making PSUs across the country. I see no necessity to divest such a profit making company,” said VSP recognised union leader D. Adinarayana.

He also added that they will also devise strategies to bring pressure on local public representatives on the issue.