Mining and exploration have been identified as the key thrust areas for growth of Hindustan Copper Ltd, says chairman and managing director Shakeel Ahmed. In an interview with Sudheer Pal Singh, he talks about the state-run company’s stake sale and expansion plans.
Do you think current market conditions are ripe for the launch of the follow-on public issue of Hindustan Copper?
Yes, the market has to live with the uncertain economic outlook, and the company doesn’t see any justification in delaying the issue.
How much money would the government be able to raise through the issue? Would it also involve issue of fresh equity by the company?
How much capital the government would raise is dependent on the price of the issue, which will be decided by EGoM (empowered group of ministers) just before the opening of the issue. It’s not possible to comment on it at this stage. No fresh equity will be raised. The company has already advised the department of disinvestment and the ministry of mines that it does not require fresh equity for funding its expansion programme.
What is Hindustan Copper’s capex plan for the current financial year, and which are the major areas where the money would be spent?
For 2012-13, the capital expenditure plan of the company is Rs 341 crore. The major areas will be mine expansion and mine development.
What is the borrowing and cash reserve position of Hindustan Copper at present?
At present, the company is debt-free. The cash reserve position is around Rs 700 crore.
What are the areas identified by the company as potential growth opportunities in the short to medium term? Also, what are the likely risks associated with growth plans, going forward?
Mining and exploration have been identified as the key thrust areas for growth of the company. Mining operations have consistently generated profits, compared to the refining business. The profitability is driven primarily by mining operations and is the maximum value creator in the value chain.
As part of this strategy, the company plans to focus on detailed exploration of existing mines and new deposits, aggressively expand and consolidate its mining business and acquire new deposits within the country as well as other geographies. Major risks associated with the growth plans are delay in getting environment clearance and shortage of talent for project execution.
What are the steps, if any, taken by the company to add to the shareholder value? Also, what are the reasons for the delay in the launch of the issue?
As mentioned earlier, the company has plans to maximise shareholder value through mine expansion, which is the highest value creator. The company has rolled out eight projects to quadruple its mine capacity from 3.4 million tonnes (mt) per annum to 12.4 mt of ore with an investment of Rs 3,435 crore over the next five years.