New Delhi: Aiming to raise a minimum Rs 1,514 crore through sale of 5.82 percent of its stake in steel major SAIL, government on Thursday set the floor price at Rs 63 apiece for the auction of shares starting tomorrow.
The offer price is at a discount of 1.41 percent over Rs Rs 63.90 -- today's closing price of SAIL on the BSE.
The government is selling 24.03 crore shares in SAIL through auction route, the last stake sale of its disinvestment programme for the current financial year.
The auction, if subscribed fully, would take the proceeds from disinvestment in this fiscal to around Rs 23,800 crore, the highest ever realisation on disinvestment front in a single year. It is, however, a tad less than the revised estimates of Rs 24,000 crore.
In a filing to the BSE, the government said that "the floor price for the offer in terms of SEBI OFS circular shall be Rs 63 per equity share of Steel Authority of India Ltd."
The offer hits the market at a time when the bourses have been on a losing streak for five days. The BSE benchmark Sensex has suffered loss of nearly 800 points in these days amid political uncertainty and particularly weak European trends.
The decision on setting the floor price for the issue saw some unusual moves as a high-powered ministerial panel met for the second time in two days to deliberate on the pricing with the company stock slumping 8 per cent in the past one week.
The Empowered Group of Ministers headed by Finance Minister P Chidambaram is believed to have yesterday decided on the pricing of the issue and a formal announcement was expected after the close of market hours.
But departing from the practice followed in previous disinvestments, the panel met again today apparently perturbed over the volatility in the stock.
Shares of SAIL dipped to four-year low levels before ending at Rs 63.90 on the BSE, down by 1.77 percent over yesterday's close. The stock has lost more than 30 percent since March last year.
The EGoM had yesterday approved a 5.82 percent stake sale in SAIL, scaling down from the 10.82 percent for which the Department of Disinvestment (DoD) had Cabinet approval. The government currently holds 85.82 percent stake in SAIL.
"We need to keep market condition in mind," SAIL Chairman C S Verma said after the EGoM meeting today.
The DoD had held roadshows in Singapore, Hong Kong, the US, the UK and continental Europe for the proposed SAIL disinvestment. SAIL comes under the administrative control of Steel Ministry.
Merchant bankers for SAIL share sale include SBI Caps, Kotak Mahindra and Deutsche Bank.
For the third quarter ended December 31, 2012, SAIL reported a 23 percent decline in net profit at Rs 484 crore from the year-ago period mainly due to lower net sales realisation amid subdued market conditions.
The country's largest steel producer has a cash balance of over Rs 6,000 crore.
The government had received Cabinet approval for SAIL disinvestment in July last year, but could not be taken forward amid the subdued market conditions. The government had kept the issue on hold anticipating buoyancy in the market to return.
SAIL shares have not been part of the market rally during 2012. The stock which was trading around Rs 115.90 in February last year has been losing ground ever since talks of disinvestment surfaced.