RINL, NBC likely to go public in FY12: Govt

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RINL, NBC likely to go public in FY12: Govt

The Union Cabinet is discussing proposals to take state-owned companies Rashtriya Ispat Nigam and National Buildings Construction public this fiscal, Sumit Bose, Secretary of Department of Disinvestment told Moneycontrol on the sidelines of a press briefing in Mumbai, Monday.

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Saikat Das
Moneycontrol

The Union Cabinet is discussing proposals to take state-owned companies Rashtriya Ispat Nigam (RINL) and National Buildings Construction (NBC) public this fiscal, Sumit Bose, Secretary of Department of Disinvestment told Moneycontrol on the sidelines of a press briefing in Mumbai, Monday.

It has already cleared follow-on public offerings of four PSUs- Power Finance Corporation , ONGC , Steel Authority of India and Hindustan Copper -for this fiscal.

"Sail FPO would launch in the second week of June, ONGC in the first week of July and Hindustan Copper would launch much later", he added.

Bose said the government is going all out to boost retail participation in share offerings of PSUs. The divestment target for the current fiscal is Rs 40,000 crore. "We are now visiting smaller towns and cities to fix the problems hindering retail participation," Bose told reporters.

To a query on whether market conditions were right for launching the public issues, Bose said : "We will bring IPOs at an appropriate time which will be beneficial for both the companies and investors."

Meanwhile, PFC follow-on issue will open on May 10 with a price band of Rs 193-203. At the upper end of the price band, the issue would mop up Rs 4,660 crore. Retail investors will get shares at a 5% discount to the issue price.
The issue comprises of 22.95 crore equity shares including 17.21 crore fresh equity and sale of 5.74 crore shares held by the Government of India. PFC is a non banking finance company (NBFC) with an infrastructure company status given by RBI which is raising money to maintain its capital adequacy ratio (CAR) and for its expansion plans.

"After the FPO, our CAR would come around 19% from the current 15%. We have been growing at 23% CAGR from FY06-FY10", said Satnam Singh, CMD of PFC. Our asset book has been growing at 23% CAGR in last four-five years, he added.

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"Rising interest rates would not hurt us. We charge interest rate at the time or disbursement and not at the time of sanction. However, our yields have gone up by 75 bps. We are also able to hike our lending rates in case of any significant rise in our cost of borrowing," Singh said.

For example, if PFC sanctions any loan to a particular project, then that loan normally gets disbursed after four-five months' time and this disbursement takes place in tranches.

Due to increasing loan of private participation in power generation, the PFC plans to increase its lending to private players. Currently out of the total borrowers, private players form 7.10% of the clientele as against 92.90% to state units.

"We plan to increase private lending to 23% from 7% during the course of time. The company has an outstanding loan book of Rs 1.77 crore as on March 31, FY11", Singh added.

Private sector borrowers are perceived to be more financial sound than the state owned entities.

Also watch the accompanying video on CNBC-TV18.