NMDC to divest 8.38 percent stake for Rs20,000 crore

Navratna public sector undertaking NMDC Ltd., and a premier mining company under the ministry of steel, today said that its board has approved filing a draft red hearing prospectus with the Securities and Exchange Board of India (SEBI) for divesting 8.38 per cent of its paid-up equity capital in a follow-on Rs20,000 crore public offer.

In a filing to the Bombay Stock Exchange, the Hydrebad-based miner said, ''The board of directors at its meeting held on January 23 approved the draft red herring prospectus to be filed with SEBI with proposed disinvestment of 8.38 per cent equity capital of NMDC Ltd, out of President of India's shareholding through further public offer.''

The government expects to raise Rs20,000 crore by selling sell 8.38 per cent stake at NMDC's Friday closing price of Rs532.50.

According to media reports on 26 December 2009, the central government, which holds 98.38 per cent in NMDC, expected to raise around Rs23,000 crore ($4.9 billion) from the sale of a 10-per cent stake. (See: Sale of 10 per cent NMDC stake to fetch Indian government Rs23,000 crore)

NMDC, which is under the administrative control of the ministry of steel, is involved in the exploration of a wide range of minerals, including iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, beach sands, etc.

The company is India's single largest iron ore producer and exporter and currently produces about 30 million tonnes of iron ore from three fully mechanised mines - two at Bailadila in Chhattisgarh and at Donimalai in Karnataka.