Cabinet to take up sail fpo proposal today

The Cabinet Committee on Economic Affairs (CCEA) is likely to consider the proposal for divesting 10 per cent government equity in the state-run Steel Authority of India Ltd (SAIL) on Thursday.

Currently, the government holds 86 per cent stake in SAIL and the sell-off is estimated to mop up Rs 16,000 crore through a follow-on public offer (FPO), which is expected to be completed in two phases. The proposal was sent to the Cabinet Secretariat last month for consideration.

“SAIL is already a traded share, so it is going to be a regular FPO. It will be done in two phases and both the tranches might come up in this fiscal only, depending when the market is stable and robust. Once the Cabinet approves it, merchant bankers would be appointed, a Red Herring prospectus would be filed and other formalities as per Sebi guidelines would be fulfilled. But, there is no urgency. It is not that we have to get going the moment CCEA approves it,” a senior official from the Ministry of Steel told Business Standard.

For the current financial yaer, the government has set a target of raising Rs 40,000 crore from selling its stake in some major profit-making public sector undertakings (PSUs) such as SAIL, Coal India, MMTC, Bharat Sanchar Nigam Ltd, SJVNL, Hindustan Copper and Engineers India Ltd, among others.

The government was not able to meet its disinvestment target for 2009-10, which was Rs 25,000 crore, due to lukewarm response from the disinvestment of NHPC, Oil India Ltd, Rural Electrification Corporation, NTPC and NMDC.