Centre defers Hudhud-hit RINL’s IPO to next fiscal

As RIL is still assessing damage caused by recent Hudhud cyclone to its plant at Visakhapatnam, the government has decided to defer the initial public offer (IPO) of the state-owned steel company.

"The new timeline for the IPO of RINL would be drawn up after the company ascertains the damage," an official said.

Cyclone Hudhud has caused damage to the RINL plant at Visakhapatnam and the company is now assessing the extent of damage. The 10 per cent government stake sale through IPO is now likely to take place sometime in the next financial year, the official added.

Cyclone Hudhud hit Andhra Pradesh on October 12, forcing Rashtriya Ispat Nigam Ltd's (RINL) to stop production at its lone facility at Visakhapatnam due to failure of power supply.

According to estimates, its impact on state-run steel maker RINL's profitability is about Rs 350 crore.

In September RINL had filed a draft prospectus with market regulator Sebi for an IPO through which the government will sell 10 per cent of its stake in the company. RINL's IPO has already been deferred twice, following suggestions of the merchant bankers in view of subdued market conditions and a fire accident at Vizag Steel Plant (VSP). In the current fiscal, the disinvestment department had planned to go ahead with the stake sale process but the cyclone devastation altered its plans.

The government plans to offload 48.89 crore shares through an offer for sale, of which 35 per cent will be reserved for retail investors and 50 per cent for qualified institutional buyers.

A discount of up to 5 per cent on the offer price shall be offered to retail investors.

UBS Securities and Deutsche Equities would act as merchant bankers for the issue. The entire issue proceeds would go to the government exchequer. Cabinet had in 2012 already accorded approval for divestment of 10 per cent equity of the company out of Government shareholding of 100 per cent. RINL was awarded the Navaratna status on November 16, 2010, with the condition that it would get listed on the stock markets within two years. It has already got two extensions in the past.