The Government lost the opportunity of 10 per cent disinvestment in Rashtriya Ispat Nigam Ltd in December. Targeting a mop-up figure of Rs 2,500 crore, the RINL red-herring prospectus was submitted to SEBI on September 27 last year.
The follow-on process, valid for three months, expired on December 26.
As the Government did not conduct the IPO before expiry, for book-built route, disinvestment for RINL was off for the current financial year for all practical purposes.
Even a prompt resubmission could not have saved the cost of a shortfall in meeting the divestment target for 2012-13.
Citing poor market sentiment, the Empowered Group of Ministers, headed by Finance Minister P. Chidambaram, had deferred the IPO, earlier planned in the middle of October. “But the Government let go the opportunity in November and December considering the long-term implication of valuation of RINL,” said a top official.
The Government opted for the time advantage in place of lower RINL monetisation. Merchant banking sources said the Government preferred to buy time as RINL could balance out its fund requirement for its modernisation-cum-expansion programmes as well as reduce capital with graded borrowing.
Owing to its oversized capital base of Rs 7,827 crore (including Rs 2,937 crore of redeemable preferential share capital) RINL preferred to go in for borrowing to fund its expansion plans beyond this fiscal.