Press Information Bureau

Government of India

Cabinet Committee on Economic Affairs (CCEA)

25-October-2012 18:27 IST

The Cabinet Committee on Economic Affairs today approved the disinvestment of 10 per cent paid up equity capital (39,64,71,600 shares, each of Full Value of Rs.1/-) of NMDC out of the Government’s shareholding of 90 percent through ‘Offer for the Sale of Shares through Stock Exchange’ (OFS) method, as per SEBI Rules and Regulations.

As of March 31, 2012, the paid up equity capital of NMDC is Rs.396.47 crore. The Government of India holds 90 percent of the paid up capital in the Company. NMDC is a listed, Navratna CPSE. After the disinvestment, the Government of India shareholding in the Company would come down to 80 percent.

The CCEA also approved the following:

(i) authorisation in favour of EGOM to change the method of disinvestment from the OFS method, if the same is required subsequently due to market conditions or due to change in SEBI Rules and Regulations, etc.,

(ii) floor price, the number of tranches, the basis of allotment and the number of shares to be allotted in each of the tranches to be decided by the EGOM; the EGOM may also accept or cancel the offer, if there is not enough demand at or above the floor price; in case of over-subscription in one or more tranches, the EGOM to decided whether the over-subscribed amount is to be retained subject to the overall disinvestment of 10 percent and,

(iii) Allotment of additional shares to eligible and willing employees at a discount of 5 percent to the issue/ discovered (lowest cut off) price up to a maximum of 0.50 percent of the paid up equity capital subsequent to completion of the transaction under OFS; the method and procedure of allotment of shares to the employees to be worked out in consultations with Merchant Bankers/ Advisors to the issue.

The NMDC is a Central Public Sector Enterprise (CPSE) under the administrative control of the Ministry of Steel. It is primarily engaged in the business of iron ore mining, but is also expanding its activities towards production of steel and other value added products. It is India's largest producer of iron ore, operating two mining complexes in Chhattisgarh and one in Karnataka.

****

SC/LM

Disinvestment of public equity via OFS approved, with EGOM empowered to set and modify tranche, price and allotment terms. Approval authorises disinvestment of a portion of Government equity in NMDC via an Offer for Sale under SEBI rules, with EGOM to determine floor price, tranches, allotment basis and tranche quantities. EGOM may alter the method for market or regulatory reasons, accept or cancel offers below the floor price, and decide treatment of oversubscriptions within the overall disinvestment limit. Additional shares may be allotted to eligible employees at a discounted price subject to a cap, with allotment procedures to be worked out with merchant bankers.