Govt initiates process for disinvestment of 10% stake in RCFL via OFS

• DIPAM has floated two RFPs for engaging merchant bankers and selling brokers, and legal advisers for the disinvestment of the Centre's minority stake in the PSU

• The authorised share capital of RCFL is Rs 800 crore and the paid-up equity capital is Rs 551.69 crore as on March 31, 2020

New Delhi: The Centre has initiated the process for the disinvestment of 10 percent share in fertilizer PSU Rashtriya Chemicals & Fertilizers Limited (RCFL) through an Offer for Sale (OFS). The Department of Investment and Public Asset Management (DIPAM) has floated two requests for proposals (RFPs) for engaging merchant bankers and selling brokers, and legal advisers for the disinvestment of the Centre's minority stake in the PSU. "The GoI intends to disinvest 10 percent paid up equity capital of RCFL out of its shareholding of 75.0006 percent, through 'Offer for Sale' (OFS) method of shares by promoters through the stock exchanges as per Securities and Exchange Board of India (SEBI) Rules and Regulations," the RFP released by DIPAM said.

RCFL's authorised share capital is Rs 800 cr

The authorised share capital of RCFL is Rs 800 crore and the paid-up equity capital is Rs 551.69 crore as on March 31, 2020. The government holds 75.0006 percent of equity in RCFL. The face value of each equity share is Rs 10. Profit after Tax for the fiscal 2019-20 is Rs 208.15 crore for RCFL. As on March 31, 2020, it has a net worth of Rs 31,86.27 crore.

ALSO READ: DIPAM ends 2020 with disinvestment yield of Rs 12,778 cr against target of Rs 2.1 lakh cr

The government is also considering allotting shares to eligible and willing employees of RCFL at a discount on the issue/discovered price (lowest cut off price) up to a maximum of certain percentage of the OFS size subsequent to the completion of the transaction under OFS. The percentage and extent shall be decided in due course, said DIPAM.

RCFL

Rashtriya Chemicals & Fertilizers Limited (RCFL) is a Miniratna fertilizers and chemicals manufacturing company under the administrative control of the Ministry of Chemicals and Fertilizers. It has two operating units, one at Trombay in Mumbai and the other at Thal, Raigad district, about 100 Km from Mumbai. RCFL manufactures Urea, complex fertilizers, bio-fertilizers, micro-nutrients, 100 percent water soluble fertilizers, soil conditioners and a wide range of industrial chemicals. It produces around 25.00 Lakh MT Urea, 4.75 Lakh MT Complex fertilizers and 4.5 Lakh MT of Industrial Chemicals every year. The company is a household name in rural India with brands "Ujjwala" (Urea) and "Suphala" (Complex Fertilizers). RCFL has countrywide marketing network in all major states. Besides fertilizer products, RCFL also produces a large number of industrial chemicals that are important for the manufacture of dyes, solvents, leather, pharmaceuticals and a host of other industrial products.

The backdrop

At the end of December 2020, DIPAM had managed to raise Rs 12,778.36 crore from disinvestment against the target of Rs 2.1 lakh crore. The government looks set to miss its disinvestment target for the financial year since it now has only one quarter to make up for the humongous shortfall. The government's disinvestment plans for the year have progressed slowly because of the Covid-19 pandemic, with DIPAM announcing multiple deadline extensions for strategic disinvestments of various public sector companies based on requests received from potential investors.

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