Stake-sale a hit; accruals to fund expansion: Hind Copper

The government has managed to rake in over Rs 800 crore with the divestment of Hindustan Copper with the help of LIC and some public sector banks. Around 3.7 crore shares were sold at an average price of Rs 156.8 per share.

The government got bids for over 5 crore shares. Divestment secretary Haleem Khan expressed satisfaction over the sale of stake. "We offered the market 4 percent and we got a bid for 5.59 percent. So, I don't think it can be considered as a failure. I think it should be considered a success keeping in view market conditions."
 
Finance minister P Chidambaram is also happy with the successful sale of stake in Hindustan Copper. Chidambaram told CNBC-TV18 that he is confident that the Rs 30,000-crore divestment target will be met. "I am happy that the issue has been fully subscribed. This is the resumption of the disinvestment process and we will go forward with disinvestment as approved by the CCEA betwen now and March and I hope that we can collect the targetted Rs 30,000 crore."
In an interview with CNBC-TV18, Hindustan Copper chairman and managing director KD Diwan explains that the sale of stake was successful and that the PSU would fund all its expansion plans through internal accruals. Below is an edited transcript of the interview on CNBC-TV18 Q: Do you have any information on the likely investors who participated in the auction?
A: No. We are yet to receive the full details of the auction. Q: Do the participants include foreign financial institutions also?
A: FIIs have not participated because they were not invited. According to the information available with me, domestic financial institutions such as GIC and LIC might have participated, but we will be able to confirm only when to receive the full details of the auctuion. Q: What happens to the balance 5.59 percent? The government plans offer a second tranche? Have you been given any clarity on when the second tranche is likely to be auctioned?
A: The Sebi guidelines mandate that we can go to the market within a period of 15 days. So, the call will be taken by the government at the appropriate time.
_PAGEBREAK_ Q: Has there been any indication of whether the government would like exercise this option as early as in the next fortnight or wait till the New Year?
A: The government may exercise the option within this fiscal year itself. As per Sebi’s guidelines, this process was to be completed by August 2013. Q: Given the fact that you have some fairly aggressive expansion plans lined up, what is the outlook now as far as a possible FPO is concerned?
A: We don't need any funds for our expansion plan. We will meet the entire fund-requirement through internal accruals. Q: Are the plans on track to quadruple volumes by FY13 in terms of expansion?
A: We are going to complete our expansions by FY17, not by FY13. Q: Can you indicate the kind of expansion plans that will perhaps be implemented in the next fiscal and the kind of cash requirement that will have?
A: Our entire expansion plan will be completed by the FY17, but in the current fiscal year we have plans to expand to Rs 150 crore to meet our expansion target. Q: How will you raise the funds required for the expansion outlay of about Rs 6,000 crore?
A: No, the outlay is not Rs 6,000 crore, but Rs 4,000 crore which includes the cost of setting up a concentrator plant at Malanjkhand. We are not going to raise any debt from market. Only in the third year of our expansion period, we shall raise some debt through the ECB route. Q: How much do you plant at to raise through the ECB route?
A: Around Rs 250 crore. Q: By when do you hope to tap the ECB market?
A: We are yet to decide the time. We will take a call only after FY14. Q: So, what is the outlook in terms pricing and margins, going forward?
A: We expect to maintain margins of over 30 percent in the current fiscal where margins will definitely improve in the second-half. Q: Do you expect a significant uptick from the current 30-percent margin?
A: This has been the trend in the past year also. Our second-half results are always better than the first-half of the year.