SAIL not to issue fresh equity, govt to sell 5% stake

Amid volatility in stock markets, blue-chip state-owned company SAIL has decided against issuing fresh equity, though the government will go ahead with its proposal to offload 5% stake in the firm.

"The SAIL board has decided that there will be no fresh equity issue. Only government stake sale will happen," Disinvestment Secretary Mohammed Haleem Khan told reporters here.

The Government holds a 85.82% stake in the maharatna company. The 5% stake sale in Steel Authority of India (SAIL) is likely to fetch the government over Rs 2,000 crore at current market prices. Shares of SAIL are trading currently at Rs 105 on the BSE.

Khan said the change in SAIL's Follow-on Public Offer (FPO) plan would require fresh approval from the Cabinet.

SAIL's FPO has failed to meet deadlines repeatedly since December 2010, due to several reasons, like rising coking coal prices and problems with merchant bankers, besides adverse market conditions.

As regards the disinvestment of oil major ONGC, Khan said the government would try to complete it by December end.

"We will initiate discussion on the FPO process of ONGC in 4-5 days," another official in the ministry said.

The government plans to offload a 5% stake in the company, which would fetch it around Rs 12,000 crore, nearly one-third of the Budget disinvestment target of Rs 40,000 crore.

Although the government has plans to raise Rs 40,000 crore from disinvestment in the current fiscal, it has not been able to make much headway because of uncertain market conditions. So far, it has raised only Rs 1,144 crore from stake sale in Power Finance Corporation (PFC).