State-owned Steel Authority of India Ltd (SAIL) has said that the process of its follow-on public offer (FPO) has begun and the issue would be appropriately timed according to market conditions.
"The issue will be appropriately timed, based on market conditions. The process of FPO has already started. We have appointed six book-running lead managers as well as the domestic and international legal advisors for the issue," SAIL chairman C S Verma told PTI.
The board sub-committee on the FPO has also appointed Crawford Bayley as domestic legal counsel in consortium with Dorsey and Whitney LLP as the international legal counsel. A meeting with the bankers has been scheduled today, he said.
At present, the government holds a stake of a little over 85 per cent in SAIL and post-FPO, its equity in the company is likely to go down to about 69 per cent.
SAIL wanted to part-fund its ongoing Rs 70,000 crore expansion programme with the proceeds from the share sale. The stake dilution will help the government to attain the disinvestment target of Rs 40,000 crore for this fiscal.
Turning to SAIL's collaboration with the Railways, Verma said that both the organisations were in close talks for expanding their business relations and exploring new avenues of partnership.
While mentioning that SAIL has recently entered into a JV with RITES Ltd for setting up a wagon manufacturing factory at Kulti in West Bengal, Verma said the company was open to more such collaborations with the Railways to meet the growing transportation needs of the country.
Initially, the facility would have a capacity to manufacture 250 wagons a year, which would be ramped up to 1,200 wagons over a period of 2-3 years.
The capital investment in the first phase would be of Rs 85 crore followed by infusion of Rs 120 crore in the second phase.
Besides, he said, SAIL was also discussing manufacturing certain products like stainless steel sheets and coils for the Indian Railways.
At present, SAIL supplies major steel requirements of the Railways such as rails wheels and axles etc. At the same time, it is also big customer of the Railways for movement of its input and finished products.
The steel major's share in the total freight business of the Railways is about seven per cent in both volume and monetary terms, Verma said.
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Admitting the market competition, Verma said that SAIL proposed to appoint distributors to cater to dealers in smaller towns and cities.
Apart from opening 10 exclusive retail shops in major towns, more than 500 dealer outlets are planned to be opened within the next two years, he said.
At present, the company has a network of more than 2,500 dealers across the country.