SAIL OFS to hit market on Mar 22

Government will divest 10.82% of its stake, base price will be announced after close of market hours tomorrow

An inter-ministerial panel today cleared a 10.82% stake sale in steel major SAIL and decided that the issue will hit the markets on Friday, a top Finance Ministry official said today.

The Empowered Group of Ministers on Disinvestment, headed by Finance Minister P Chidambaram, met and decided on the pricing of the share sale. The base price would be made public only after the close of market hours tomorrow.

In early trade today, SAIL scrip touched a year-low of Rs 64.05 on the BSE. It was later trading at Rs 65.80, up 0.53% on the BSE. At the current market price, a 10.82% stake sale could fetch government around Rs 2,500 crore.

"SAIL OFS (offer for sale) has been approved by EGoM. The issue will hit market on March 22," Disinvestment Secretary Ravi Mathur told reporters here.

He further said the details of the SAIL stake sale would be informed to the stock exchanges later in the day.

The Department of Disinvestment (DoD) has already held roadshows in Singapore, Hong Kong, US, UK and continental Europe for the proposed SAIL disinvestment. SAIL comes under the administrative control of Steel Ministry.

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%.

For the third quarter ended December 31, 2012, SAIL reported a 23% 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 Cabinet Committee on Economic Affairs had in July last year approved 10.82% disinvestment in SAIL out of government's 85.82% stake, through the OFS route.

However, the disinvestment plan 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 touched a 52-week high of Rs 115.90 on February 17, 2012, has been losing ground ever since talks of disinvestment began.

Government is banking on disinvestment of SAIL to meet the disinvestment target of Rs 24,000 crore in the current fiscal. So far, it has raised over Rs 22,300 crore through PSU stake sales.