New Delhi: As Rashtriya Ispat Nigam Ltd (RINL) is still assessing damage caused by the recent Cyclone Hudhud to its plant at Visakhapatnam, the government has decided to defer the initial public offering (IPO) of the state-owned steel company.

“The new timeline for RINL’s IPO would be drawn up after the company ascertains the damage," an official said. Cyclone Hudhud has caused damage to the RINL plant at Visakhapatnam and the company is now assessing the extent of damage. The 10% government stake sale through the IPO is now likely to take place sometime in the next financial year, the official added.

Cyclone Hudhud hit Andhra Pradesh on 12 October, forcing RINL to stop production at its lone facility at Visakhapatnam due to failure of power supply. According to estimates, its impact on state-run steel maker RINL’s profitability is about 350 crore. In September, RINL had filed a draft prospectus with market regulator Sebi for an IPO through which the government will sell 10% of its stake in the company. RINL’s IPO has already been deferred twice, following suggestions of the merchant bankers in view of subdued market conditions and a fire accident at the Visakhapatnam Steel Plant (VSP).

In the current fiscal, the disinvestment department had planned to go ahead with the stake sale process but the cyclone devastation altered its plans. The government plans to offload 488.9 million shares through an offer for sale, of which 35% will be reserved for retail investors and 50% for qualified institutional buyers. A discount of up to 5% on the offer price shall be offered to retail investors. UBS Securities and Deutsche Equities would act as merchant bankers for the issue.

The entire issue proceeds would go to the government exchequer. The cabinet had in 2012 already accorded approval for divestment of 10% equity of the company out of the government’s shareholding of 100%. RINL was awarded Navaratna status on 16 November 2010, with the condition that it would get listed on the stock markets within two years. It has already got two extensions in the past.

Listing is a prerequisite to retain the Navaratna status. In case of RINL losing the Navratna status, the company’s financial autonomy will also be affected as the coveted tag empowers the board of a central PSU (public sector undertaking) to take investment decisions up to 1,000 crore in a joint venture project or wholly-owned subsidiary.

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