Finance ministry moots splitting Nalco shares

To ensure maximum participation of retail investors in the disinvestment of the National Aluminium Company (Nalco), the finance ministry has proposed splitting of shares of the company.

"In view of the high market price of the share of Nalco, it would be necessary to consider splitting of the shares in order to provide affordability to small investors and to allot shares to a large number of investors," the ministry said in a note for the Cabinet Committee on Economic Affairs (CCEA) for off-loading 10 per cent of the shares in Nalco through public offer.

"The ratio of the split would be decided by the department of disinvestment in consultation with the ministry of mines and the department of public enterprises," sources said.

The government has proposed to off-load 10 per cent of shares in Nalco in the market which will bring down its stake in the company to 77.15 per cent.

By selling 6,44,30,962 shares in the company the government could raise up to Rs 1,400 crore based on the price of the company's scrip on the stock exchanges.

The government is also planning to renegotiate the fees quoted by advisors, who were appointed earlier when proposal for foreign listing of the company and its strategic sale was mooted by the previous government.

"Over the last four years the fee quoted by advisors have become competitive... In case these firms do not agree to reduction in their fees, action for fresh appointment would be taken," sources said.

The proceeds of the sale, which would be completed within six months of cea approval, would go to the National Investment Fund (NIF) which will be managed by LIC, SBI and UTI.