Confident of raising Rs 17k cr through SAIL FPO: Steel minister | business | Hindustan Times
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Confident of raising Rs 17k cr through SAIL FPO: Steel minister

The government today said divestment in steel PSU SAIL will generate about Rs 17,000 crore in the first case of stake sale in the current fiscal year, while putting behind the lacklustre show of another PSU NMDC.

business Updated: Apr 08, 2010 21:16 IST

The government today said divestment in steel PSU SAIL will generate about Rs 17,000 crore in the first case of stake sale in the current fiscal year, while putting behind the lacklustre show of another PSU NMDC.

Speaking to media after CCEA cleared raising additional equity and disinvestment of government stake in SAIL in two tranches, Steel Minister Virbhadra Singh said: "SAIL is one of the biggest companies in the public sector and it is profit making.

"Very few shares of NMDC were in market but large number of SAIL shares are already in market. SAIL is going to be expanded and modernised at a cost of Rs 70,000 crore."

The country's largest steel maker had reported a net profit of Rs 4,669.47 crore for the nine months ended December 31, 2009, as against Rs 4,688.13 crore in the corresponding period last fiscal.

Earlier in March, retail investors gave lukewarm response to PSU mineral giant NMDC's USD 2 billion FPO, which was subscribed only 1.25 times, mainly backed by government-owned LIC. The government had to fix the price of the FPO at the lower end of the price band at Rs 300 per share.

Singh, however, exuded confidence that SAIL's FPO will be successful and the goverment is expected to raise about Rs 17,000 crore in both the tranches and it will be completed in this financial year.

Asked how much time gap will there be between the two tranches, Singh said: "The matter will go to the empowered committee and it will take a decision on this very soon. It can be within a month as most of the ground work has been done."

As part of the SAIL's FPO, the firm will raise an additional 10 per cent of the paid-up equity and the government on its part will disinvest 10 per cent of its holding.

This will be done in two tranches. In each tranche, there will a five per cent FPO (follow on public offer) and five per cent sale of the government equity.

Singh said employees of SAIL will also be given chance to participate in the FPO.

"We are going to give a certain percentage (of the FPO) to the employees," he said.