Steel Authority of India ltd (SAIl) is all set to be the first State-owned entity through which the newly appointed NDA Government will begin its disinvestment exercise, as according to highly placed sources, the Department of Disinvestment (DoD) has approved the auction method to sell 5 per cent of Government’s share in it.
The move is likely to fetch the exchequer Rs 1,800 crore and the road shows for SAIl divestment are to begin by the end of August and the process will be wrapped by mid-September.
“The offer for sale (OFS) route has been finalised for divesting Government’s 5 per cent stake in SAIl. At the current rate of Rs 90 per share, we are looking at raising Rs 1,800 crore through the move. Domestic road shows will be held in Mumbai and Chennai in the last week of August. For international road shows, one team will cover london, New York and Boston while another team will cover Singapore and Hong Kong during the first week of September,” sources privy to the development said.
The Pioneer had exclusively reported on June 23 that DoD met Steel Ministry to roll out SAIl’s divestment process. Though the Cabinet Committee on Economic Affairs (CCEA) has approved stake sales in two other entities namely Rashtriya Ispat Nigam ltd (RINl) and Hindustan Aeronautics ltd (HAl), sources added that work on these may not immediately start.
Also the big ticket divestments like Coal India ltd (CIl) and ONGC are likely to be delayed, especially CIl as the Coal Ministry is non-committal about it owing to threats of strike by the CIl’s unions. In this scenario, SAIl stake sale will ring in the proceeds for the Government in 2014-15. Finance Minister Arun Jaitley had announced a disinvestment target of Rs 43,425 crore for the current fiscal in the Budget.
Sources further pointed out that the Government is keen to wrap up the SAIl stake sale by September as this will give the markets a concrete message that the NDA regime is serious about walking the talk.
This is the reason why the OFS route has been identified for SAIl divestment, as sources pointed out that by using this method, the entire exercise can be completed within a month of launching, whereas in the follow on public offer (FPO) route, around three to four months are consumed. According to Sebi norms, there should be 25 per cent public float in State-owned entities, and in SAIl’s case it is currently 20 per cent. Once Government’s divests 5 per cent more from its stake, the steel maker will achieve the required percentage.
Meanwhile as reported by this newspaper earlier, the Government is also in the process of making a list of sick PSUs which it can sell off to private entities and earn well required capital. Especially the real estate worth of these entities is what the Government is eyeing, sources said. The Narendra Modi-led BJP Government rode to power at the Centre largely on the promise of expediting economic growth and disinvestment is a significant tool towards achieving this.