NMDC FPO Price Band Fixed (10-Mar-2010)
The government stated that it has fixed the price band of NMDC FPO at Rs 300-350 a share.
It is a hefty discount of 25% from its last closing of Rs 400 a piece on the BSE in order to attract retail investors.
However, the Empowered Group of Ministers fixed a price band of Rs 300-350 for the FPO, which opens today and closes on March 12.
This was said by NMDC CMD Rana Som.
Not wanting the risk its last divestment in PSUs this fiscal in which it aims to garner Rs 25,000 crore, it is said that the government offered attractive discount.
Previously, the share sale programme of 2 other PSUs namely NTPC and REC just managed to scrape through as investors.
Particularly retail investor, had cold-shouldered them since they felt the offer price was high.
Som sounded confident that the follow-on offer would get an overwhelming response. Meanwhile, the 25% discount is given on yesterday's closing of Rs 400 a share on the BSE.
Due to this development, shares of the company declined by a maximum of about 9% before closing at Rs 375.65, down 6% than last closing on the BSE.
Present on the occasion, Disinvestment Secretary Sumit Bose said NMDC's FPO is different from that of the 2 power due to its intrinsic value of the miner along the mode of sale of shares adopted.
On the other hand, the government is selling 8.38% of its equity in the company or 33.22 crore shares at a face value of Rs 1 through the FPO.
It expects to raise a maximum of Rs 11,700 crore.
Earlier, the government is said to have fixed a price band of Rs.300-350 for the forthcoming follow-on public offer (FPO) of NMDC.
It is a move which may help the exchequer mobilise about Rs.11,700 crore.
The Empowered Group of Ministers fixed the price band in this range.
Previously, NMDC Ltd. had announced that it has filed the final papers for its proposed Follow-on Public Offer (FPO), through which the government is divesting its 8.38 % stake in the company.
In a filing to the National Stock Exchange (NSE), the company said that NMDC Ltd. has filed a Red Herring Prospectus (RHP) with the Registrar of Companies - Hyderabad for FPO of 33.22 crore shares of Re. 1 each by way of an offer for sale by the President of India
The company has also plans to offer a discount of 5 % on the issue price to retail investors and its employees.
NMDC was incorporated in 1958 as a Government of India fully owned public enterprise. The company is under the administrative control of the Ministry of Steel, Government of India.
The company is involved in the exploration of wide range of minerals including - iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, beach sands etc.
It is India's single largest iron ore producer and exporter, presently producing about 30 mn tons of iron ore from 3 fully mechanized mines viz. - Bailadila Deposit-14/11C, Bailadila Deposit-5, 10/11A (Chhattisgarh State) and Donimalai Iron Ore Mines (Karnataka State) which are awarded ISO 9001-2000 certification.
The Company has posted a net profit of Rs. 8599.90 mn for the Q-3 ended 31st December 2009 as compared to Rs. 14249.50 mn for the corresponding period of the previous year. Total Income has decreased from Rs. 25666.80 mn for the Q-3 ended 31st December 2008 to Rs. 18334.80 mn for the for the corresponding period in 2009.
Last month, the company has announced that it has entered into a Memorandum of Understanding (MoU) with Tata Steel Ltd., to explore the possibility of acquisition, exploration and development of mines, extraction and processing of minerals, setting up integrated steel plants and other businesses of mutual interest.
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