SAIL`s divestment plans gets approval from FinMin

Last Updated: Friday, October 23, 2009 - 20:50

New Delhi: State-owned SAIL on Friday said the
finance ministry has given its in-principle approval for 20
per cent disinvestment of the steel giant.

The divestment comprises 10 per cent equity dilution by
the government and the company issuing additional 10 per cent
shares.
"...Ministry of Steel has communicated to the company `in
principle` approval of the Department of Disinvestment for
further public offer equivalent to 10 per cent of existing
paid-up equity capital by SAIL," the company said in a filing
to the Bombay Stock Exchange.

It further said that the finance ministry has also given
its approval for disinvestment of "equivalent size of equity
held by the government of India in two discrete tranches, each
containing five per cent of FPO plus five per cent offer for
sale".

However, the company said that the proposal would be
subject to approval of the Cabinet. "This is subject to
fulfillment of certain conditions, including obtaining
approval of the Cabinet Committee on Economic Affairs (CCEA)."

The timing of the stake sale and public offer would be
decided after CCEA nod, it said.

"After approval of CCEA, the timing for the above offers
would be decided considering, inter-alia, SEBI guidelines and
prevailing market considerations and also fulfilment of
conditions, if any, stipulated in the CCEA approval," the
filing added.

Steel Minister Virbhadra Singh had said the process of
disinvestment in the company is likely to start in the current
fiscal.
The government is likely to raise around Rs 8,000 crore
through the disinvestment at current share prices. The amount
raised would go to the National Investment Fund created mainly
to finance social sector.

SAIL, which will also raise about Rs 8,000 crore through
two-phase FPO, will use the fund to part finance its Rs
70,000-crore expansion projects to increase its annual
production capacity to about 23 million tonnes by 2012.

The proposed FPO would bring the government`s holding in
the company down to about 68 per cent from over 85 per cent at
present.

SAIL`s share prices today closed 0.41 down at Rs
181.95 on the Bombay Stock Exchange from its previous close.

Bureau Report

First Published: Friday, October 23, 2009 - 20:50

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