NMDC eyes over 47% divestment

State-owned mining major National Mineral Development Corporation (NMDC) has asked the government to offload over 47 per cent of its stake in the company. The government holds 98.38 per cent in the navratna PSU with the balance being held by banks, financial institutions and public.

"We have recommended that government maintains its ownership of the company by retaining 51 per cent equity but divest the remaining," a company official said. "This will help the company's exposure in the market, improve its tradeability and mop up revenues for future expansions.

" Recently the company's stock was upgraded to the A category from the B category of stocks listed on the Bombay Stock Exchange. In February, the stock was moved from the lowest category of stocks-Z to the B category after the procedures for dematerialisation of 50 per cent of its publicly-held shares were completed.

It was also influenced by the market capitalisation of the company which had peaked at over Rs 200,000 crore in November 2007. NMDC had also split its shares and announced a bonus issue late last year.

The shift happened despite the company" miniscule free float. "The shift is a result of internal arrangement by the Securities and Exchange Board of India (SEBI), said Kumar Raghavan, company secretary and executive director, NMDC. "For private companies 10 per cent of the shares have to be public even at the time of listing but since NMDC is a public sector undertaking, there is no binding of this sort.

" With a market cap of over Rs 110,000 crore, the mining heavyweight is one of the biggest listed PSUs in the country. It produces 30 million tonnes of iron ore and has reserves of over 200 mt.

The company is investing Rs 19,000 crore over the next five years

NMDC to buy SIIL for Rs 800 cr

National Minerals Development Corporation (NMDC), India's largest iron ore producer and exporter, will acquire the Hyderabad-based Sponge Iron India (SIIL) for a maximum of Rs 800 crore. The acquisition proposal is yet to be approved by SIIL.
NMDC has formed a draft proposal to merge with SIIL by acquiring the Hyderabad company's shares. It will also have to pay Rs 80 crore to the Government of India as purchase consideration and buy Andhra Pradesh Government's 1.23% stake in SIIL.
A company official said, "We want to diversify our portfolio and add value to our products and in the process we realised that we have no assets in Andhra Pradesh. So, we decided to buy SIIL."




The acquisition of SIIL is of strategic importance to NMDC, as it expands its iron ore production. The official said that NMDC plans to leverage SIIL's production capabilities. SIIL produces 60,000 tonnes sponge iron, 1,40,000 tonnes iron ore and 70,000 tonnes coal annually.
With an investment of Rs 23,000 crore, NMDC hopes to increase its turnover six-fold to Rs 35,000 crore by 2014. By FY15, the company plans to take its overall production capacity to 50 million tonne per year.
The company is setting up a Rs 14,000-crore integrated steel plant in Chhattisgarh and a Rs 1,400-crore pig iron plant. It is also expanding capacity at three of its mines at a cost of Rs 4,500 crore.
Source: Sify