Rashtriya Ispat Nigam chief in favour of share buyback from government

 Speaking  at the Indian Chamber of Commerce-sponsored seminar here, RINL Chairman & Managing director P K Bishnoi pointed out that since the equity base of the company is already close to Rs 5,000 crore,  it is advisable to pare the equity down by way of share buyback from the government.

 He, however, felt that the extent of the buyback should not exceed the equity worth Rs 2,000 crore and the exercise should be spread over a period of five to seven years.
In order to make it viable, the company will first need to build up reserves to meet the buyback expenses.

Currently, the government holds 100 per cent shareholding in RINL.   According to him, redemption of preference shares would start from 2011 and continue till 2014-15. The preference capital base of the company  presently stood at Rs 2,927 crore.   
 
Divestment policy
Referring to the issue of sale of shares by the government, Bishnoi said RINL has been listed among the PSUs that are specially earmarked for 25 per cent disinvestment.  With the new government assuming power, RINL has been awaiting the new policy on disinvestment.

Making a strong pitch for disinvestment, the RINL CMD stressed that disinvestment would result in better corporate governance and more efficient management. Bishnoi said disinvestment would result in better corporate governance and more efficient management.

Bishnoi said the other means for increasing the valuations were by securing sources of key raw materials, like coking coal and iron ore. He said since RINL was a debt free company, pricing of loans would become better if raw material sources were secured. For this, RINL would become a strategic partner with Orissa Mineral Development Corporation (OMDC) and transfer over 50 per cent of MMTC’s stake in Nilachal Ispat Nigam Ltd for securing sources of iron ore.

For coal supplies, RINL had been one of the partners in joint venture company International Coal Ventures where SAIL, Coal India, NTPC and NMDC were the other partners.

Bishnoi said the JV was seeking assets in countries like Mozambique, Australia, USA and Canada.

As far as preparedness of the company for IPO was concerned, the RINL board had passed a resolution in 2006 when the PSU was listed for disinvestment.