RINL may lose navaratna tag

By SNV Sudhir

Visakhapatnam, April 30, 2013: The state owned steel maker, Rashtriya Ispat Nigam Ltd (RINL), which was in the news recently after the allotment of Bayyaram iron ore mines by the state government, seems to have lost hopes to go for Initial Public Offering (IPO) in the near future.

Last year, RINL which runs Visakhapatnam Steel Plant (VSP), here had missed going for IPO thrice due to June 13 mishap, strong opposition from work force and poor market conditions among other reasons.  Last time it was on October 16, 2012 that the RINL was supposed to be listed in the stock exchange, which was deferred indefinitely.

Due to which it was at the verge of losing the Navaratna status. However the status was extended for one more year by the union steel ministry, which will end in the third week of November this year and it was compulsory to go for IPO to retain the coveted tag.

The Navratna status, is given to those PSUs who score a composite score of 60 or above out of 100 based on its performance during the last three years on six identified parameters.

The Navaratna status empowers a PSU to enjoy greater financial and functional autonomy. The RINL was given Navaratna status on November 16, 2010 with the condition that it would get its shares listed on the bourses within two years.

RINL's performance on all fronts including investment of major amount in expansion and modernisation of plant and completing all necessary formalities even for IPO were considered by the government in extending the Navaratna status for another one year, said the RINL authorities in an earlier occasion.

RINL is in the advance stage of completing its expansion of its production capacity from 3.2 million tonnes to 6.3 million tonnes at a cost of Rs 12,500 crore. The RINL IPO was supposed to begin the government’s Rs 30,000-crore divestment programme for the current fiscal. By diluting its 10 percent stake in RINL, the government aimed to raise about Rs 2,500 crore.

The Cabinet Committee on Economic Affairs (CCEA) in January last year had approved disinvestment in RINL. The company has appointed four merchant bankers - UBS Securities, Deutsche Bank, Edelweiss Capital and IDBI Capital - as the book-running lead managers to manage the IPO process.

The entire workforce of VSP too observed total work shutdown on October 12 and 13, last year opposing IPO.

“I don’t think company would attempt to go for IPO in anytime near future as the market conditions are very poor. And regarding Navaratna status it is the government’s discretion whether to extend it or not. We are all hopeful that the prestigious tag will be extended further due to our overall good performance,” said an RINL official.