Manganese Ore IPO Review

 

Manganese Ore IPO Review

Manganese Ore (MOIL) will hit the market on 26th November 2010 and its price band will be declared on 23rd Nov 2010. Via Initial public offering (IPO), the company is issuing 33,600,000 equity shares of Rs.10 face value per share.

The offer will start on 26th Nov 2010 and close on 31st December for Institutional investors and 1st Dec 2010 for Retail investors.

MOIL will be the fifth PSU to offer IPO in this year and the 50th company to be listed on the stock market. Let me tell you for your information that there are total 276 Indian PSUs but not the all are divestment worth.

Anyways, so let us understand something about the business of Manganese Ore Company.

About Manganese Ore (MOIL) Company -

Mine Locations of MOIL

A Miniratna PSU was originally set up in the year 1896 as Central Province Prospecting Syndicate which was later renamed as Central Provinces Manganese Ore Company Limited (CPMO), a British Company incorporated in the UK. In 1962, as a result of an agreement between the Government of India and CPMO, the assets of the latter were taken over by the Government and MOIL was formed with 51% capital held between the Govt. of India and the State Governments of Maharashtra and Madhya Pradesh and the balance 49% by CPMO. It was in 1977, the balance 49% shareholding was acquired from CPMO and MOIL became a 100% Government Company under the administrative control of the Ministry of Steel.

At present, MOIL operates 10 mines, six located in the Nagpur and Bhandara districts of Maharashtra and four in the Balaghat district of Madhya Pradesh. All these mines are about a century old. Except 3, rest of the mines are worked through underground method.

What is Manganese Ore?

This ore in the form of manganous oxide is used as micro-nutrient for cattle feed and fertilizers. MOIL fulfills about 50% of the total requirement of dioxide ore in India. At present, the annual production is around 1,093,363 tonnes which is expected to grow in the coming years.

The most important manganese ore is pyrolusite (MnO₂). Other economically important manganese ores usually show a close spatial relation to the iron ores. Land-based resources are large but irregularly distributed. About 80% of the known world manganese resources are found in South Africa, other important manganese deposits are in Ukraine, Australia, India, China, Gabon and Brazil.In 1978 it was estimated that 500 billion tons of manganese nodules exist on the ocean floor. Attempts to find economically viable methods of harvesting manganese nodules were abandoned in the 1970s.

I would personally give 4 out of 5 stars to this Company. This is because there are very few Manganese resources in the world the major source being South Africa. And that’s why the demand for this precious element will be forever.

And that’s why owning a stake of this company can really be worth in the long run.

Another thing is that, invest in this company for the long time horizon (More than 5 years). Don’t simply invest in the company only for the purpose of some quick gains on listing. Many people in India invest in IPOs to make some quick profits. And that’s why without understanding its business, they blindly invest in that company for quick profits.

Manganese Ore (MOIL) is a fundamentally strong company and one should invest in it for a long time horizon. Hope to see good price bands from the government coming week…!!!