An inter-ministerial panel has cleared the sale of a 10.82 per cent stake in steel major Steel Authority of India Limited (SAIL). The issue will hit the markets on Friday, March 22.
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 will be made public only after the close of market on Thursday.
The stock touched a 52 week-low of Rs 64.05 in early trade on the Bombay Stock Exchange. It was later trading at Rs 65.80, up 0.53 per cent on the BSE. At the current market price, the 10.82 per cent stake could fetch around Rs 2,500 crore.
"SAIL OFS (offer for sale) has been approved by the EGoM. The issue will hit market on March 22," Disinvestment Secretary Ravi Mathur told reporters. The details of the stake sale will be informed to the stock exchanges later in the day.
The government's stake will fall to 75 per cent after the sale.
The Department of Disinvestment (DoD) has already held roadshows in Singapore, Hong Kong, the US, the UK and continental Europe for the proposed divestment. SAIL comes under the administrative control of the Steel Ministry.
The merchant bankers for SAIL share sale include SBI Caps, Kotak Mahindra and Deutsche Bank.
For the third quarter ended December 31, 2012, SAIL reported a 23 per cent 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 the sale of the 10.82 per cent stake, from the government's 85.82 per cent holding, through the OFS route.
However, the plan could not proceed due to market conditions. The government had kept the issue on hold expecting the conditions to improve.
SAIL shares have not been part of the market rally during 2012. The stock touched a 52-week high of Rs 115.90 on February 17, 2012, but has been losing ground ever since talks of divestment began.
The government has managed to raise over Rs 22,300 crore through the sale of stakes in public sector units compared to its target of Rs 24,000 crore in the current fiscal year.