SAIL divestment hits hurdle

The government’s disinvestment programme has met with more hurdles, as the finance ministry may have to seek fresh Cabinet approval for stake sale in Steel Authority of India Ltd (SAIL) and Hindustan Copper. The two companies have told the government they do not want to go for fresh equity.

On a brighter side, it may get some breather in the form of oil major ONGC’s follow-on issue, discussions on which are likely to start shortly.

“SAIL does not want to go for fresh equity,” Disinvestment Secretary Mohammed Haleem Khan said on Wednesday. “The same is the case with Hindustan Cooper. So we have to go for authorisation process again,” he told reporters on the sidelines of Economic Editors’ Conference. The finance ministry was planning to divest 10 per cent in SAIL in two separate tranches, while the company would also raise additional equity of to the extent of 10 per cent. Now the ministry will take the Cabinet nod once again to sell its stake through a follow-on public offer.

Another government official said SAIL and Hindustan Copper did not want to raise fresh equity in view of capital requirements, surplus cash and choppy markets. The government would now have to see whether it would want to divest its shareholding in SAIL by five per cent in each tranche or more, he added. The entire process of getting fresh approvals could take “about two months”.

Similarly, the Cabinet had approved the disinvestment of 10 per cent paid-up equity capital of Hindustan Copper out of government shareholding along with issue of fresh equity of equal size by the company.

The government holds 85.82 per cent stake in SAIL. A five per cent stake sale will fetch it over Rs 2,000 crore at the current market capitalisation. The public float in Hindustan copper is very limited, with the government holding 99.59 per cent.

Further, the government will initiate discussion on the FPO process of ONGC in next four-five days, and would try to complete it by end-December. It plans to offload a five per cent stake in the company, which alone would fetch it around Rs 12,000 crore.