The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved a 10% stake sale in consultancy major Engineers India Ltd (EIL) through a public issue, a move likely to fetch the exchequer around Rs. 800 crore.
The government holds 80.4% in EIL and post divestment, the
shareholding in the company would come down to 70.4%. In 2010, it had divested 10% stake through a follow-on public offer.
"We expect to get around Rs. 800 crore at current prices," finance minister P Chidambaram said after the meeting of the CCEA. The disinvestment will take place through a follow-on public offering (FPO), he added.
The finance minister also expressed hope that the disinvestment of the leading engineering consultancy firm would happen this fiscal year.
"The OFS (offer for sale) mechanism is not available in this case," as the company is already compliant with the Securities and Exchange Board of India's (SEBI's) public holding norms. Besides, it does not also feature in the top 100 companies in terms of market capitalisation.
The government used the OFS route, popularly known as the auction method, to divest its stake in NMDC and Hindustan Copper in the current fiscal year. SEBI had introduced the OFS route to help companies achieve minimum public holding norms.
The paid-up equity capital of the company stood at Rs. 169 crore as on March 31, 2012.
EIL scrip closed down 4.1% at Rs. 229 on the Bombay Stock Exchange due to profit booking.
The government had proposed to raise Rs. 30,000 crore through stake sale in public sector units in 2012-13 and so far it has been able to realise only just over Rs. 6,900 crore. Disinvestment of Oil India and National Thermal Power Corp is lined up for January and February.