NMDC disinvestment likely by mid-Dec, expected to fetch Rs 7,500 cr

The government has said it is planning 10 per cent stake sale in National Mineral Development Corporation (NMDC) by mid-December, which could fetch the exchequer about Rs 7,500 crore.

The Cabinet Committee on Economic Affairs (CCEA) had on October 25 cleared sale of about 39 crore equity of NMDC of face value of Rs 1 each through the 'Offer for Sale by promoters through the stock exchanges' route.

At present, the government holds 90 per cent stake in the NMDC. After disinvestment through the OFS mode, the government holding in the entity will come down to 80 per cent.

As of March 31, 2012, the paid up equity capital of NMDC stood at Rs 396.47 crore.

"NMDC disinvestment is likely by mid-December. We hope to raise Rs 7,500 crore via 10 per cent share sale in it," Steel Secretary D R S Chaudhary said on the sidelines the India International Trade Fair in New Delhi.

The finance ministry had last week said it is looking at divesting stakes in three PSUs - Hindustan Copper, NMDC and Oil India by end December - which may fetch Rs 12,000 crore to the exchequer.

Steel Minister Beni Prasad Verma said the process of NMDC disinvestment has already begun and roadshows were being organised.

Earlier this month, the government appointed leading law firm ALMT Legal, Advocates & Solicitors as legal advisor for selling its 10 per cent stake in the country's largest iron ore miner.

The government has also appointed Citigroup Global Markets India, Goldman Sachs (India) Securities, DSP Merrill Lynch (all Mumbai based), Enam Securities and ICICI Securities (Delhi based) as Merchant Bankers for the stake sale.

NMDC has reported a nearly 15 per cent decline in its net profit at Rs 1,678.62 crore for the quarter ended September 30, 2012, largely due to lower production and fall in sales.

The company, under administrative control of Ministry of Steel, is primarily engaged in the business of iron ore mining. But it has also been expanding its activities into production of steel and other value added products. NMDC operates two mining complexes in Chhattisgarh and one in Karnataka.

The government plans to raise Rs 30,000 crore from disinvestment during the current financial year. However, it has not been able to come out with any public issue during the first seven months due to poor equities market conditions.

Due to the uncertain market conditions, the government could raise only Rs 14,000 crore from disinvestment in the last financial year, against a target of Rs 40,000 crore.

With inputs from PTI