FPO Snapshot: Rashtriya Chemicals & Fertilisers

The Government has approved the sale of its stake in another public sector undertaking (PSU), Rashtriya Cehmicals & Fertilisers Ltd (RCF). This news has granted some momentum to the stock price over the past couple of days. The stock has been in the news for quite a long time now on hopes of the Government divesting a part of its stake (upto 12.5%) in the company. The Cabinet Committee on Economic Affairs has finally accorded its green signal to this divestment. The move will bring down the Government's holding in the company to less than 80% in RCF from the existing 92.5% existing holding. 

The government may probably be able to raise around Rs 400 crore through this stake sale, considering the current market price of RCF. This may be a small amount in the overall scheme of the governments’ disinvestment plan which has set a target of raising close to Rs 30000 crore by end of FY13. However, this move is more to do with complying with Sebi's shareholding norms where the government will have to bring down its holding in PSUs to less than 90%.

RCF is a government owned company engaged in the manufacture and sale of chemicals. It produces fertilisers and markets them under the brand names of Suphala, Ujwala, Sujala, Biola and Microla. The company pioneered the manufacture of industrial chemicals such as Methanol, Sodium Nitrate, Sodium Nitrite, Ammonium bicarbonate, Methylamines, Dimethyl Formamide, Dimethylacetamide. However, it is the only manufacturer of DMF in India. For now we leave you with these basics of the company. Watch this space for more details on whether and why you should buy into this stock when it comes up with details of pricing very soon.