The decision to list Rashtriya Ispat Nigam Limited by floating an IPO has generated a lot of heat here with the unions rejecting the arguments in favour of disinvestment saying they would prefer forfeiting Navratna status to offloading its shares.
All the leading unions of Visakhapatnam Steel Plant, which is owned by RINL, on Monday met top officials of RINL at Ukkunagaram and expressed their dissent over the Government of India's decision to appoint merchant bankers for selling away 10 per cent of its share.
The union leaders D. Adinarayana, N. Rama Rao, Mantri Rajasekhar and others said they would prefer losing Navratna status to going public. “We absolutely find no reason in offloading 10 per cent of government's shares. It may subsequently pave the way for offloading majority stake to private parties,” Mr. Adinarayana, who is the president of Visakha Steel Workers' Union, said.
The deadline for receiving bids from the merchant bankers for the IPO ends at 3.30 p.m. on Tuesday. The Inter-Ministerial Group (IMG) will short-list the bids on the basis of the presentations by the bankers on September 8 for further evaluation of their financial bids. If required the presentations will continue on September 9.
Conditions
One of the conditions put forth at the time of conferring Navratna status was the company has to be listed within two years. The GoI contention is that the shares will get appreciation only when RINL equity is opened to outsiders. Only reputed category-I merchant bankers registered with Securities and Exchange Board of India (SEBI) are permitted to act as Book Running Lead Managers (BRLM).
The merchant banker, who will finally become BRLM, will assist and advise the government in the process of capital restructuring of RINL and also to suggest ‘suitable options.' The IPO is for 10 per cent of paid-up equity share comprising 1,000 each, out of GoI's 100 per cent share holding, in the domestic market. The paid-up capital as on March 31, 2011 is put at Rs.7,827.32 crore.
As per the request for qualification (RFQ), the BRLM will advise the GoI timing and modalities of IPO and structure the IPO in conformity with the prevailing framework/regulations of SEBI, stock exchanges and other rules in force.
