Ahead of the country's largest steel maker Steel Authority of India's (SAIL) share sale programme, the government today approved a proposal to trim the state-owned firm's board size to 14 members from 24 at present.
The move will help the company now to appoint the required number of independent directors to meet regulatory norms, before its follow-on public offer (FPO) which is slated for later this fiscal.
Listing norms mandate that half the company's board should consist of independent directors,.
Last year, SAIL had proposed to trim its board strength to 18 from 24 mandated at present to expedite decision making.
"The government has approved the proposal of reducing SAIL's board size to 14 members, which will include seven functional and seven non-functional (independent) directors. The restructuring of the board will definitely give a fillip to SAIL FPO," Steel Secretary P K Misra told PTI.
At present, SAIL board is mandated to have 24 members, out of which eight posts of independent directors are vacant. The company has 12 functional directors, but only 4 independent directors.
"If need be we can further propose to add two functional and two independent directors on the SAIL board," Misra said.
He added, "The managing directors of the five plants would now be called CEOs and would be permanent invitees on SAIL's board."
Now, SAIL board will include five directors from the company and two government observers.
SAIL is in the process of appointing requisite number of independent directors on its board to meet the regulatory requirements for launching its first phase of FPO, which is expected to raise about Rs 8,000 crore.
Overall, the 20 per cent FPO would see the government divesting its 10 per cent stake in the company, while the steel major will issue shares in the same quantum.
"The government is evaluating when to launch the FPO. We are still looking at December as an option or else the FPO may come in January-February," Misra said.
SAIL has maintained that trimming the board would also help in expediting decision making in view of its estimated Rs 70,000 crore expansion programme.
It plans to augment its annual production capacity to about 23 million tonnes from the present 14 million tonnes by 2012.
