Govt approves 10% stake sale in EIL, hopes to raise Rs 800 crore
The government on Thursday approved 10 percent stake sale in Engineers India Ltd (EIL), which may fetch the government around Rs 800 crore.
New Delhi: The government Thursday decided to offload its 10 stake in consultancy major Engineers India Ltd (EIL) through public offer, which may fetch it around Rs 800 crore this fiscal.
"We expect to get around Rs 800 crore at current prices," Finance Minister P Chidambaram told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA), which approved the disinvestment in EIL.
The disinvestment will take place through Further Public Offering (FPO), he said.
Chidambaram expressed the hope that disinvestment of the leading engineering consultancy firm would happen this fiscal.
After the disinvestment, the government's shareholding in the company would come down to 70.40 percent. The paid up equity capital of the company, as on March 31, 2012 was Rs 168.47 crore.
The government holds 80.40 percent stake in EIL, a 'Mini -Ratna' firm. In 2010, it had divested 10 percent stake through an FPO in EIL.
To a query, Chidambaram said, "The OFS (Offer For Sale) mechanism is not available in this case", as the company is already compliant with market regulator Sebi's public holding norms. Besides, it is not in top 100 companies in terms of market capitalisation.
The government used the OFS route, popularly known as auction method, to divest its stake in NMDC and Hindustan Copper this fiscal. Sebi introduced OFS to help companies achieve minimum public holding norms.
EIL scrip closed at Rs 228.90 on the BSE, down 4.11 percent from its previous close.
For the July-September quarter of the current fiscal, EIL reported net profit of Rs 161.24 crore, up 10 percent over the same period in 2011-12.
The government has proposed to raise Rs 30,000 crore by way of disinvestment in 2012-13 and so far it has been able to realise just over Rs 6,900 crore. Disinvestment of Oil India and NTPC is lined up for January and February.
EIL is leading provider of design, engineering and project management and consultancy services firm for the hydrocarbon sector.