The steel ministry is set to seek an extension from the department of public enterprises to allow Rashtriya Ispat Nigam (RINL) to retain its ?Navratna? status. The steel PSU is likely to lose this status as its initial public offer (IPO) has been deferred indefinitely.
One of the main criteria for granting such status to RINL in 2010 was that the steel maker should have completed its IPO by November 15, 2012. However, the company is far from getting listed on the stock exchanges. The reason being its lower valuation.
??We are going to write to the department of disinvestment and public enterprises explaining why the RINL?s public offer could not take place and seek an extension for retaining the Navratna status,?? a senior ministry official said.
Merchant bankers UBS Securities and Deutsche Equities (India) have proposed R15-17 as the price band for RINL listing as against the present book value of R22.50 a share.
RINL is the second largest state-run steel producer in India after SAIL. The company?s IPO has been deferred three times due to bad market conditions. The Cabinet committee last month deferred it last month.
The RINL?s IPO is a part of government?s plans to generate R30,000 crore through disinvestment. If the Navratna status is taken away, it may affect the financial autonomy such as go ahead with projects worth R1,000 crore without government approval, form joint ventures etc, of the company.
The company is trying to divest 10% stake and started the process early this year. It also conducted various road shows both in the domestic and foreign markets to raise about R2,500 crore.
??The valuation by the merchant bankers is too low for a company which produces 3 million tonne steel per annum. We can not get it listed at that price,?? the ministry official said.
