National Mining Development Corporation Ltd (NMDC), a government of India enterprise, has filed the draft red hearing prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for divesting 8.38% of its paid-up equity capital in a follow-on public offer (FPO).

The company will offer 332 million equity shares in this divestment, said an NMDC filing to the Bombay Stock Exchange. 

The government may raise as much as Rs 20,000 crore from this divestment, according to a report in Business Standard. The report further stated that the government will use the proceeds to part fund its various social and infrastructure programmes. The government plans to complete the process of FPO by the end of March 2010.

The government of India currently holds 98.38% of the paid up equity capital of NMDC, while the remaining stake is with financial institutions, public and the employees. 

Shares of NMDC were trading at Rs 530, down by Rs 2.5 or 0.47%, on the BSE at 12.40 on Monday.  

The company has seen a 40% decline in its net profit at Rs 860 crore for the third quarter ended December 31, 2009, against Rs 1,424.95 crore a year ago. Net sales of the company declined by 32% to Rs 1,587.58 crore against Rs 2,340.2 crore.

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