Govt eyes Rs 3,500 cr from SAIL disinvestment by March-end

So far in FY13, govt has raised Rs 21,500 cr through PSU stake sales, against target of Rs 30,000 cr

The government is eyeing around Rs 3,500 crore through stake sale in SAIL by March end to reach close to the Rs 30,000-crore disinvestment target for the current financial year.

"SAIL stake sale is very much in our domain for the current fiscal. DoD is in talks with the Steel Ministry on how to go about it. We are looking to raise somewhere between Rs 2,700-3,500 crore," official sources said.

The Department of Disinvestment (DoD) is already planning roadshows in Singapore, Hong Kong, US, UK and continental Europe for the proposed SAIL disinvestment.

Sources said the DoD has communicated to the administrative ministry that the process of roadshows can be commenced from the last week of February so as to be prepared with the stake sale process by end March.

So far this fiscal, the government has raised Rs 21,500 crore through PSU stake sales, against the Budget target of Rs 30,000 crore. DoD Secretary Ravi Mathur had earlier said the government would raise around Rs 27,000 crore.

The government is planning to sell 10.82 per cent of its stake in state-owned Steel Authority of India (SAIL). At the current market price of Rs 78 per SAIL share, the stake sale could fetch around Rs 3,400 crore to the exchequer.

For the third quarter ended December 31, 2012, SAIL reported a 23 per cent decline in net profit at Rs 484 crore mainly due to lower net sales realisation amid subdued market conditions.

"SAIL financial results are on expected lines. We are thinking of doing the stake sale in the second half of March," sources said.

The merchant bankers for SAIL share sale include SBI Caps, Kotak Mahindra and Deutsche Bank. Post stake sale, the government's stake would come down to 75 per cent.

There have been apprehensions that government might defer stake sale in SAIL to next fiscal owing to tepid financial results and bleak performance of the steel sector.

However, sources said the sale is unlikely to be deferred as the government is trying hard to achieve the disinvestment target to restrict fiscal deficit at 5.3 per cent of GDP this financial year.

The Cabinet Committee on Economic Affairs had in July last year approved 10.82 per cent disinvestment in SAIL out of government's 85.82 per cent stake, through the Offer of Sale (OFS) route.

However, it could not be taken forward amidst the subdued market conditions. The government has 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 touched a 52-week high of Rs 115.90 on February 17, 2012, fell to its 52-week low of Rs 75.80 on September 5, 2012.