State-owned Steel Authority of India may hit the capital market soon to raise funds either by way of a public offering or through borrowings to part-finance its ongoing Rs 70,000-crore expansion plan, a top government official said today.
“SAIL requires funds for its expansion. We are looking (at options) and discussing with SAIL authorities. SAIL board is also looking into this — how to raise funds for the expansion, which includes raising funds through borrowings or a follow-on public offering (FPO),” Steel Secretary P K Rastogi told reporters here today on the sidelines of a steel summit.
FPO is a way of raising funds by offering additional shares after a firm has had an initial public offering (IPO).
He, however, said a final decision on the issue was yet to be taken, as discussions were on with the PSU. On time frame, he said: “There is no time frame for this... Time process can be anything — one day or one month.”
SAIL Chairman S K Roongta had earlier said the company may be looking at issuing additional equity to part-fund its capital expenditure. The government currently owns an 85.82 per cent stake, while 4.59 per cent is with the Life Insurance Corporation and the rest is with the public. Earlier, sources said the government was also planning to offload part of its stake in the steel PSU as per the disinvestment programme. In case SAIL plans to go for a public offering to raise fresh equity, the government may also join in to sell 5-10 per cent of its holdings, they added.
The steel major has a capital expenditure programme of about Rs 10,300 crore for the current fiscal, half of which would come from debt. SAIL is in the process of expanding its annual production capacity to about 23 million tonnes by 2012 from the present 14 million tonnes.