RINL on the brink of losing Navratna status

State-owned steelmaker Rashtriya Ispat Nigam faces the prospect of losing its coveted 'Navratna' status soon due to indefinite deferment of its initial public offer(IPO).

Listing on the bourses within 2 years was one of the major conditions when RINL was awarded the 'Navratna' status on November 16, 2010. Though the company has less than a month to meet the criteria, there is no sign of company's IPO hitting capital markets in the immediate future.

When asked whether RINL could lose the Navratna status due to IPO deferment, company Chairman A P Choudhary said, "It has to be decided by the government.

Department of Disinvestment will decide the dates of IPO."

The RINL IPO was indefinitely deferred on October 9 due to differences between the Steel Ministry and merchant bankers on its price band. The issue, which was deferred for the third time since July, was supposed to hit the markets on October 16.

Incidentally, the RINL issue, in which government will be offloading its 10 per cent stake, was supposed to begin this year's disinvestment process.

In case of RINL losing the Navratna status, company's financial autonomy will also get impacted as the coveted tag empowers the Board of a central PSU to take investment decisions up to Rs 1,000 crore in a joint venture project or wholly-owned subsidiary.

"We hope that the government will take a lenient view on RINL. The IPO has been put off for some time only and that was not in our hands. We have done all the groundwork, DRHP (draft red herring prospectus) has been filed and only dates and price band have to be decided," a senior company official said.

RINL currently has a steel making capacity of 3 million tonnes per annum (MTPA) and is the second largest state-owned steel maker in the country after SAIL. The company, which had clocked its best-ever annual turnover in 2011-12 at Rs 14,457 crore, is in final stages of increasing its capacity to 6.3 MTPA.

Besides, it has been planning to set up a new 4 MTPA unit, meant to produce flat products, at an investment of about Rs 22,000 crore in the coming years.

The Navratna status, a prestigious tag among central PSUs, is given to those firms who score a composite score of 60 or above out of 100 based on its performance during the last three years on six identified parameters.

The parameters include net profit to net worth, earnings per share, manpower cost to cost of production or services and gross profit out of turnover.

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