REUTERS - The new government is likely to sell a 5 percent stake in state-run Steel Authority of India Ltd in the last week of this month, people directly involved in the process said, kicking off what is set to be a busy divestment schedule.
Prime Minister Narendra Modi, who won a landslide election victory in May largely on a promise of economic growth, is expected to speed up divestments to bolster revenue generation.
The marketing roadshows for the stake sale, valued at about $340 million at current market prices, will begin soon after the presentation of the federal budget on July 10, the people said.
The sources declined to be named as they were not authorised to speak to the media before a government announcement. A SAIL spokesman in New Delhi declined to comment.
The SAIL stake divestment, if completed, would be the first of a series of asset disposals that economists estimate could raise 600-800 billion rupees ($10-$13 billion) in this fiscal year that ends in March 2015.
The divestment proceeds will make it possible for New Delhi to finance a potential increase in the budget deficit, which has already hit $40 billion or nearly half of the target for this fiscal year, without having to increase borrowing.
The government's asset sale drive is also expected to gather momentum after the market regulator last month said the state should dilute its stake in listed public-sector companies over the next three years and cap it at 75 percent.
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The government owns stakes of as much as 90 percent in some listed public-sector companies including Coal India , the world's largest coal miner, and trading company MMTC Ltd , according to the stock exchange data.
After selling a 5 percent stake in SAIL, the government's holding in the country's second-biggest steelmaker would come down to 75 percent.
SAIL shares ended about 3 percent lower at 95.75 rupees on Thursday. Still, the stock is up 32 percent this year compared with a 22 percent rise in the BSE Sensex, helped by an improved outlook for state firms after Modi's victory.
($1 = 59.7050 Indian Rupees)
(Reporting by Sumeet Chatterjee in MUMBAI and Krishna N Das in NEW DELHI, editing by David Evans)