'Volatile markets may push SAIL FPO to next fiscal'

Volatility in stock markets may further delay state-run Steel Authority of India's (SAIL) Rs 8,000 crore follow-on public offer (FPO) due in March, pushing the share sale to next fiscal, said a senior government official today.

"We are ready, but our expectation is that markets should be more stable. It could also get pushed to next (financial) year," Steel Secretary P K Misra told reporters here on the sidelines of a steel summit.

He added that "the decision (on the date of FPO) is likely after the Budget on February 28".

The SAIL's FPO was earlier planned to hit the markets by the middle of February.

However, volatility in capital market and a controversy about its investment bankers, who were also working for the public offer of Tata Steel in January, have pushed the sale to March after the proposed FPO by oil and gas major ONGC.

Since beginning of 2011, the Bombay Stock Exchange benchmark Sensex, which closed today at 18,300.90 level, has gone down by about 11% due to a host of national and international issues like 2G spectrum scam and Egypt crisis.

The bearish run has also caused the SAIL scrip to decline by about 13.87% since then.

The company shares that were trading at Rs 187.95 on the BSE on January 03 (1st working day of the market in 2011), closed today at Rs 163.20 a piece.

"Definitely it makes sense to defer the issue till market sentiments improve, if (the) government wants to get maximum revenue from the share sale," Consortium Securities AVP Vishwesh Choudhary said.

He, however, added, "this will be a tough call to take as targeted revenue from the disinvestment proceeds for the year will come down considerably, if it happens."

According to a senior steel ministry official, the merchant bankers -- SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC-- appointed by the company to manage the issue, are expected to meet the disinvestment department officials tomorrow to discuss the issue.

Last month, the merchant banks had come under fire for taking up a similar job with Tata Steel, whose FPO closed on January 21 and was subscribed by over six times.

The whole controversy kept on lingering for some time and delayed the issue, which was supposed to hit the markets by mid-February.

The Maharatna firm has now agreed to keep the banks, on the conditions that they give an undertaking that there was no clash of interests and banks are committed to SAIL FPO.

The government has so far garnered about Rs 23,000 crore by divesting its stakes in Coal India, Engineers India, MOIL and some other PSUs against its target of Rs 40,000 crore. It is banking on big-ticket FPOs of ONGC and SAIL to meet the target.