SAIL stake sale on Friday

To kick off Centre's FY15 disinvestment drive

The government is set to kick off its Rs 58,000-crore disinvestment programme for 2014-15 on Friday, with dilution of a five per cent stake in Steel Authority of India Ltd (SAIL). The steel ministry said in a notification to the exchanges late in the evening on Wednesday that it would sell 206.5 million shares in the company through the offer-for-sale (OFS) route.

The offer would open at 9:15 am and close at 3:30 pm on Friday and the ministry would declare the floor price a day before (December 4), the notification said.

The Department of Disinvestment in the finance ministry plans to sell its stake in public-sector undertakings (PSUs) this year through the OFS route, which has at least a 10 per cent quota for retail investors, and takes 15-30 days for regulatory clearances.

At current market price, sale of a five per cent stake in SAIL will fetch the government about Rs 1,740 crore.

The Centre plans to raise Rs 36,925 crore by selling its stake in 10 public-sector undertakings, including behemoths Oil and Natural Gas Corp (ONGC), Coal India and NHPC, and smaller firms like Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Container Corporation of India (Concor).

Additionally, it plans to raise about Rs 6,500 crore from part-sale of stake it holds through Specified Undertaking of Unit Trust of India (Suuti) in Axis Bank, Larsen & Toubro, and ITC; and Rs 15,000 crore from sale of its residual stake in Hindustan Zinc and Bharat Aluminium Company (Balco).

Apart from SAIL, finance ministry officials are confident that Coal India, ONGC, and NHPC will hit the market by the end of January. At current prices, the combined proceeds from these four public-sector behemoths will be around Rs 42,911 crore.

So far, however, there is less clarity on stake sales in the smaller companies, some of which might be shelved. The combined proceeds from sale of five per cent each in Concor, PFC, REC and MOIL could be about Rs 5,210 crore at current rates, while the government expects about Rs 5,500 crore from sale of 10 per cent each in Hindustan Aeronautics and Rashtriya Ispat Nigam.

Finance Minister Arun Jaitley has set a tight fiscal deficit target of 4.1 per cent of gross domestic product, so every rupee counts.

The tax authorities have to raise Rs 6.54 lakh crore in the second half of 2014-15 — 28 per cent more than what they did in the period from October 2013 to March 2014 — to meet the full-year target of Rs 9.77 lakh-crore. So, it is imperative that the targets from disinvestment, spectrum sales, and special dividends are met.