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MOIL plans IPO to fund expansion

business Updated: Jul 27, 2008 20:23 IST
Sumant Banerji

The government is considering a proposal to divest some of its stake in Manganese Ore India Ltd (MOIL) through a share offering in the stock market.

Currently, the unlisted company is 81.57 per cent owned by the central government, while the remaining stake rests with governments of Maharashtra and Madhya Pradesh — 9.61 per cent and 8.82 per cent, respectively.

An initial public offering, or IPO “is being considered to raise funds for the company for further investments”, said a senior steel ministry official, who spoke on condition of anonymity. Merchant bankers will be appointed shortly and they will work on the details, he said.

The plan to list the country’s largest manganese ore producer comes at a time when the government is preparing to revive its disinvestment programme that had been earlier put on the backburner because of the opposition from erstwhile Left allies.

The company has an installed capacity of over 12 lakh tonne, spread over 10 mines — six in districts of Nagpur and Bhandara in Maharashtra and four in Balaghat district of Madhya Pradesh.

Manganese Ore is among the 156 profitable public sector companies, and its turnover totalled Rs 530 crore in the three quarters ended December 2007. It logged a profit before tax of Rs 311 crore in the same period, while turnover during the period was 50 per cent above the target set by the government. Besides looking for fresh reserves of ore in the country, the company needs to invest heavily in value addition, beneficiation and upgradation techniques, the ministry official said.

The company had signed an agreement with Steel Authority of India Ltd last year to set up a 1 lakh tonne per annum ferro alloy plant in Bhilai in Chhatisgarh. The plant is being set up with an investment of Rs 225 crore, half of which will come from Manganese Ore.

The company is also setting up another 75,000 tonne per annum ferro alloy plant in Bobbili in Andhra Pradesh with an investment of Rs 150 crore.