SAIL not to issue fresh equity, govt to sell 5% stake

Wed, October 19, 2011 | AgencyPress Trust of India

New Delhi : Amid volatility in stock markets, blue-chip state-owned company SAIL has decided against issuing fresh equity, though the government will go ahead with its proposal to offload 5% stake in the firm.

"The SAIL board has decided that there will be no fresh equity issue. Only government stake sale will happen," Disinvestment Secretary Mohammed Halesem Khan told reporters here.

The Government holds a 85.82% stake in the maharatna company. The 5% stake sale in Steel Authority of India (SAIL) is likely to fetch the government over Rs 2,000 crore at current market prices. Shares of SAIL are trading currently at Rs 105 on the BSE.

Khan said the change in SAIL's Follow-on Public Offer (FPO) plan would require fresh approval from the Cabinet.

SAIL's FPO has failed to meet deadlines repeatedly since December 2010, due to several reasons, like rising coking coal prices and problems with merchant bankers, besides adverse market conditions.

As regards the disinvestment of oil major ONGC, Khan said the government would try to complete it by December end.

"We will initiate discussion on the FPO process of ONGC in 4-5 days," another official in the ministry said.

The government plans to offload a 5% stake in the company, which would fetch it around Rs 12,000 crore, nearly one-third of the Budget disinvestment target of Rs 40,000 crore.

Although the government has plans to raise Rs 40,000 crore from disinvestment in the current fiscal, it has not been able to make much headway because of uncertain market conditions. So far, it has raised only Rs 1,144 crore from stake sale in Power Finance Corporation (PFC).

Indian government may remove 4 bankers from SAIL FPO

Thursday, 27 Jan 2011

DJ recently reported that the Indian government is examining whether to remove four of six merchant bankers for state run Steel Authority of India Ltd's follow on public offering after they engaged in rival Tata Steel Ltd's recent share sale.Mr PK Misra steel secretary told Dow Jones Newswires that a decision on the matter is likely in a day or two.He told “We have sought the advice of the Department of Disinvestment on whether to remove the four bankers from handling SAIL's share sale due to a conflict of interest.”

Mr. Misra said even if the four bankers are to be removed it won't delay the share sale process as new managers can be hired shortly.He said that the share sale is possible by the third week of February, adding that the timing of the offering will depend on stock market conditions and how soon the dispute is resolved.

SAIL has served notices on SBI Capital Markets Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, Deutsche Equities (India) Pvt Ltd and Kotak Mahindra Capital Co, asking them to explain whether handling the share sales of two rival companies isn't a conflict of interest.(Sourced from dowjones.com)