The only government-led copper Public Sector Undertaking (PSU), Hindustan Copper, has sought immediate funding of Rs 1,000 crore or merger of the company with another PSU from the government.

The company’s debt is higher than its net worth on account of high gestation and high capex plan, the unprofitable decision on two investment projects, and accumulation of GST due to inverted duty structure on copper concentrates. The company’s debt-equity ratio is at 4.21:1.

CNBC-TV18 has learnt that the company has highlighted to the government that there will be a cash deficit on account of planned capex, repayment of the loan, and interest. It expects about Rs 900 crore cash deficit by the end of FY21.

The company has suggested that the merger of Hindustan Copper with mining PSUs like NMDC or Coal India will be the most suitable option. It believes that a merger with NMDC or Coal India will not be a distress sale and it will help with an appropriate valuation to help meet the divestment target of the government.

Hindustan Copper is part of the government’s strategic sale and CNBC-TV18 also learns that the government may look at the merger and put up for strategic sales once it becomes profitable.

(Edited by : Abhishek Jha)

First Published:Nov 12, 2020 12:40 PM IST