The government on Thursday approved a 20 per cent disinvestment in the country’s largest steel manufacturer Steel Authority of India Ltd that would fetch Rs 16,000 crore.
“Following the two-tranche disinvestment, the government and the company would get Rs 8,000 each,” said P Chidambaram, home minister, after a meeting of the Cabinet Committee on Economic Affairs.
The stock closed down 18.3 points, or 7.2 per cent, at Rs 237 on the Bombay Stock Exchange on Thursday.
Post divestment, the government’s equity will fall to 69 per cent from the current 85.82 per cent. “The stake sale will take place in two tranches of 10 per cent each,” Chidambaram said. Five per cent will be divested through follow-on public offer (FPO) and another 5 per cent through the sale of government equity.
At present, SAIL is undertaking a Rs 70,000-crore investment programme for capacity expansion, which will see its overall capacity go up to 23 million tonnes by 2012 from the existing 13 million tonnes.
“According to the current market price, the divestment should raise over Rs 16,000 crore,” said S.K. Roongta, chairman, SAIL. "The exact time will be decided by the empowered committee of the government but we are very confident that it will be a successful FPO and divestment.”