RINL approaches Steel Ministry to defer Rs 2500 cr IPO
New Delhi: Rashtriya Ispat Nigam (RINL) has sought deferment of the government's Rs 2,500 crore share sale, saying the employee morale was low after the devastating fire at the company's Vizag plant that claimed 19 lives.
The RINL management wrote a letter to the steel ministry on June 22 requesting deferring the initial public offering (IPO) as employees' morale has touched a low after the fire that killed 19 people, including 12 staffers.
The initial public offer (IPO) of the state-owned steel maker was to hit the market in last week of July. The launch has already been deferred once by three weeks, following the suggestions of the merchant bankers in view of subdued market conditions.
On June 13, a major explosion took place during the trial of a new oxygen control unit near the steel melting shop, resulting in the fire and the subsequent deaths.
The two-day strike from June 27 called by the union to oppose the IPO has also been postponed following the deaths due to the explosion.
At a meeting with Steel Ministry and Department of Disinvestment (DoD) officials last week, the merchant bankers to the issue - UBS Securities India and Deutsche Equities (India) - advised the government to postpone the issue till September-October in the wake of the disaster,
"Any attempt to launch it before September-October could backfire as the management is sure to face a lot of unpleasant questions during roadshows," a company source said quoting merchant bankers.
RINL had submitted the draft red herring prospectus with the market regulator Sebi on May 18. The Cabinet Committee on Economic Affairs in January approved disinvestment of 10 per cent of government's stake in the firm.
The company has to bring out its IPO before November this year as its Navratna status, accorded on November 16, 2010, is subject to its getting listed in two years (from the date of acquiring the status).
The deferment of the IPO could also affect the government's Rs 30,000 crore disinvestment target for the current fiscal.