Orissa Mineral Development Co Ltd (OMDC), the listed step down mining subsidiary of RINL, is likely to add shine to RINL’s (Rashtriya Ispat Nigam Ltd) forthcoming IPO valuation. But OMDC is still struggling to come out of six year-long dark patch.
“The debt-free OMDC’s high market capitalisation, reserves and deemed asset base will cast favourable light on RINL’s share valuation,” an RINL senior official told Business Line.
RINL sources said the Department of Disinvestment is currently having a final look at the red herring prospectus (RHP) before its filing with the SEBI shortly. The RHP will figure strengths and weaknesses of 2011-acquired public sector Bird Group of Companies — EIL, the holding company, and its two mining arms, OMDC and Bisra Stone Lime Co (BSLC).
However, these two currently non-operational mining companies, which are to take care of raw material security for RINL, are still bogged down by legacy issues. All the Odisha leases of OMDC and BSLC, have expired and need renewal.
OMDC has come close to start development work at one of its six mining leases. Its contract miner Hindustan Steelworks Construction Ltd (HSCL) said it can begin development of Kolha Roida mine in Keonjhar district only after Odisha Government gives green signal.
Satish Chandra, MD of OMDC confirmed that HSCL mobilised equipment. “Commencement of mining operation, however, may take a few months more,” he added.
Ownership knots
Applications for renewal of OMDC and BSLC leases though have been filed, assurance of obtaining such licences is hardly available. “Neither a clear timeframe could be mentioned with certainty for beginning mine operations,” sources said. OMDC last operated two mines in 2006.
OMDC also untangled knots for the lease ownerships. Three leases including for Kolha Roida are in the name of Bharat Process and Mechanical Engineers Ltd (BPME), an erstwhile entity of the Bird Group and now under liquidiation. Three others are with Bird and Co Pvt Ltd (which was subsequently merged into the Bird Group).
Some renewal applications have been filed in the name of BPME. Subsequently, BPME, ‘authorised’ OMDC to secure renewals. On Thursday, OMDC (face value Rs 10) stock closed at Rs 45,600 on the BSE, and its market capitalisation stood at Rs 2,736 crore. Its 2011-12 networth was Rs 802.36 crore.