The government today said the disinvestment process in steel giant SAIL would start in the current financial year.
“The first phase of disinvestment will happen in the current fiscal,” Steel Minister Virbhadra Singh told reporters here.
Singh has already approved a proposal for 20 per cent two-phase Follow-on-Public Offer (FPO) of SAIL. The next phase was likely next year, the minister said.
Giving details of the divestment plans, Steel Secretary P K Rastogi said the FPO would be a combination of 5 per cent dilution of government’s equity and 5 per cent issue of additional shares by the company. The government would mobilise around Rs 8,000 crore through the FPO at current share prices The amount might vary depending on the share price of SAIL, he added.
Rastogi further said the proposal had got in-principle approval from the disinvestment department of the finance ministry and SAIL’s board was now finalising the proposal. SAIL would be informing market regulator Sebi about the planned FPO.
Once the regulator approval is obtained, the ministry will prepare a note to be sent to the Cabinet for its approval, which is likely by December.
SAIL, which will also raise about Rs 8,000 crore through two-phase FPO, will use fund part to finance its Rs 70,000-crore expansion projects.
SAIL is undertaking an expansion programme to increase its annual production capacity to about 23 million tonnes by 2012. The amount raised by the government would go to National Investment Fund created mainly to finance social sector.
The company will be the third PSU under the steel ministry after iron ore miner NMDC and manganese producer MOIL to get approval for disinvestment this year. The proposed FPO would bring the government’s holding in the company down to about 68 per cent from over 85 per cent at present.
The follow-on-public offer is issue of additional equity to investors. SAIL’s share prices today closed 2 per cent down at Rs 190.55 on the Bombay Stock Exchange from its previous close. The proposal to disinvest 8.38 per cent and 10 per cent of government’s stake in NMDC and MOIL respectively has already been approved by the steel ministry and sent to the ministry of finance.
