The government has decided to divest 15 per cent stake in domestic steel major Steel Authority of India (SAIL) to fund its growth and expansion plans.
The two-phased sale would be a mix of government stake sale and issue of fresh shares which would ultimately bring government’s holding in the company down to 68 per cent from the current 85.82 per cent. During the process capital to the tune of Rs 8,000 crore would be raised.
In the first phase, the government would sell 5 per cent of its shareholding while SAIL will issue an additional five percent equity. "The government plans to sell a total of 10 per cent of its holding, while the company is expected to issue additional shares worth 10 per cent of the expanded equity base," a senior steel ministry official said.
The amount to be raised from the share sale would be fixed after cabinet gives its approval but is likely to be in the vicinity of Rs 8,000 crore at current rates. The timing of the share sale would be announced later.
SAIL plans to raise its annual hot metal production capacity to 23.5 million metric tonnes by the financial year ending March 2012 from the current 14.6 million tonnes.
The steel ministry official said SAIL will use the funds raised to partly fund its expansion.
The government has already given its nod to the FPO proposal. The steel major is now finalising the document which would be presented to the board soon. The proposal would then be sent to the Securities and Exchange Board of India for its approval.