To raise around $250 mn via ECB route: Hindustan Copper

ET Now Mar 23, 2012, 02.27PM IST

In an interview with ET Now, Shakeel Ahmed, CMD, Hindustan Copper Ltd, talks about the company's divestment plans and shares his outlook for copper prices. Excerpts:

ET Now: Tell us more about your divestment plans. Have you heard anything from the government on the timing of it?

Shakeel Ahmed: So far we have not heard anything formally from the Department of Disinvestment about disinvestment of Hindustan Copper equity. But as I mentioned earlier, we are not looking at raising fresh equity for Hindustan Copper Ltd. So it is essentially the Department of Disinvestment's call to take a view on disinvestment timeline and other related issues. As on date, the final decision has not been taken.

ET Now: So as and when the decision gets taken, what is the estimated amount that you would look to raise via this divestment even if it is not happening right now, but over the next six months?

Shakeel Ahmed: No, it will depend upon valuations and a lot more issues and a final call as you know is taken by the group of ministers. So, it would be pretty premature for me to comment on the amount to be raised as part of disinvestment.

ET Now: The other aspect is that copper demand and let us just talk a little bit about how business is shaping up particularly on the commodity side. Copper demand slowdown is expected due to China which is primarily responsible for 40% of dual consumption and there are signs that the economy there is slowing down. What is the outlook on copper prices and then the demand scenario?

Shakeel Ahmed: Yes, a short answer to your question is yes. There are concerns and there are headwinds about copper prices due to slowing down of demand in China which contributes to 40% consumption. But I will hasten to add that as far as copper is concerned, there are also concerns on supply side. So, our expectation is that the price impact on copper price should not be as much as on other commodities like iron ore and currently it is ranging around $8400 on LME. This trend should sustain and if there is bad news, it may drop, if there is good news in China, it should improve.

ET Now: Just wondering as to what is the situation with equity fundraising or any kind of other modes of fundraising aside of divestment of course one what is the total cash that you have on the books and any fundraising expected in the next quarter itself?

Shakeel Ahmed: Actually our cash will be on the upside of about Rs 550 crore on our books as on date and we are working on ECB. As our projects take off and requirement of investment increases, we will very seriously consider ECB in the next financial year. It could be as early as the first quarter of the next financial year.

ET Now: The market would clearly want to know about fundraising plans especially via ECB route. Can you lay out how much you would be looking to raise?

Shakeel Ahmed: Although our internal approvals are sufficient to take us through the next financial year, but due to natural hedge in our revenue model we find ECB funding very attractive. So, we have advanced the ECB. Earlier we had thought of taking it during 2013-2014, but we might consider it during the next financial year. It should be around $250 million to begin with.

ET Now: What about the bottom line growth at the end of this fiscal?

Shakeel Ahmed: At Malanjkhand, our stepping ratio has been poor during the current financial year. So, we are shelling out more by way of amortisation there. So to that extent, our profitability will be impacted. But we will be able to overcome this drop in profitability by a good margin due to improved sales.

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