In an exclusive interview to NDTV Profit, Hindustan Copper CMD Shakeel Ahmed talks about upcoming divestment plan, current operations and overseas bidding in Afghanistan.
Here is the edited interview transcript.
- Can you give us a rough timeline as to when the cabinet is going to approve the divestment and when it will go in the market?
- Our earlier approval was for 10 per cent disinvestment and 10 per cent fresh equity. This is being revised to 10 per cent disinvestment only. The cabinet note has already been circulated. Our expectation is that it will be taken up by the cabinet for approval in the next two-three weeks.
- Why did you drop the idea of 10 per cent fresh equity?
- When we initiated the process, our financial condition was not good. But today, we have profits of Rs 473 crore in the last financial year and our cash reserves are more than Rs 700 crore. Our expectation is that we will be able to meet our expansion requirement mainly through our internal accrual and small bridging can be done through ECB (External Commercial Borrowings).
- How much can the government garner through the 10 per cent divestment?
- It is a sensitive issue. We never take a call on the pricing of the issue. All that I can say is that our current market quote is Rs 258 and the price will be fixed lower than that. You can easily calculate what that 10 per cent amount will be.
- Can you tell us about the mines you own, company operations and the production for ore and metals?
- We have mines in three locations - Khetri in Rajasthan, Malanjkhand in Madhya Pradesh and Ghatsila in Jharkhand. In Khetri, we have taken up three mine expansion projects and in Malanjkhand, it will be one huge project with an investment of Rs 1800 crore. In Ghatsila, there are four mines, which are either being expanded or are being freshly operated. All these mines will require Rs 3,435 crore of investment spread over the next five years; at the end of which, our mine capacity will be 12.4 million tonnes of copper per annum.
- How do you plan to tackle the competition from private players like Sterlite and Birla group? Is it a healthy competition?
- In selling refined copper product, we do have competition. But we are a small player in selling refined copper when compared to Sterlite's four lakh tonnes and Birla's five lakh tonnes. Our annual production for refined copper is 31,000-32,000 tonnes. There is no real competition with them. But we do have put in place, a very transparent marketing policy based on the daily, fortnightly and monthly averages.
- How much cash reserves do you have and how do you plan to raise funds for capex (Capital Expenditure)?
- Our current cash stands at more than Rs 700 crore. Our expectation is that the deficit will be Rs 208 crore for FY 13-14, which could go to FY 14-15 between our requirement for investment and internal revenue generation. This amount is to be bridged through external commercial borrowings which we find more advantageous, because there is a natural hedge in our revenue model.
- Tell us about your overseas expansion plan and when will you be filing your financial bids?
- We, in consortium with SAIL, NALCO and MECL, have been shortlisted for copper and gold deposits in Afghanistan. Final decision on the number of bids has not been taken. Our expectation is that at least we will bid for two-three copper deposits.
- How do you see the copper prices panning out?
- In the current year, supply is less than the demand. Copper prices should have remained more buoyant than they are currently. But the current prices have factored the slowing demand in China, current Euro crisis and some fears of recession in US. If the news is good, the cop per prices should head towards $8000 per tonne. If the news is bad, it should head towards $7000 per tonne this year.
With inputs from Md. Sakil