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Disinvestment of Government’s shares in Steel Authority of India Ltd (SAIL) may take place in February. However, there is still no clarity on sell off of another steel company, Rashtriya Ispat Nigam Ltd (RINL).
“Preparation for sell off in SAIL is on, and we hope to complete this in February,” a senior Government official told Business Line. However, a senior SAIL official said that no date has been finalised and formal intimation from the Government is awaited. Disinvestment in SAIL is likely to fetch around Rs 3,500 crore to the Government.
On July 19, the Cabinet Committee on Economic Affairs (CCEA) approved the disinvestment of 10.82 per cent equity in the company. Disinvestment will bring down the Government’s holding to 75 per cent. The process will be completed through offer-for-sale of shares through stock exchanges, better known as auction method.
So far, Rs 6,800 cr
In the current fiscal, the Government used the new mechanism while selling part of its equity in NMDC and Hindustan Copper and mobilised nearly Rs 6,800 crore. Now Oil India is expected to be on block next month followed by NTPC and SAIL. ONGC was first PSU divested through this method last fiscal.
Interestingly, SAIL’s current market price is lower than its book value, which is around Rs 96. On Thursday, its share closed at Rs 91.45 on the BSE. There is feeling that with demand for steel picking up and good progress on modernisation projects, the market price will improve in coming days.
Meanwhile, Government officials pleaded ignorance about the status of the Initial Public Offering (IPO) of another steel company RINL. On October 9, the proposed IPO of the Vishakhapatnam-based company was deferred for the third time. “Since SAIL is a listed company, so price discovery will be easy, but this is not possible in case of RINL, as it is not listed,” the official said.
While RINL’s IPO was deferred twice due to poor market conditions, the third time it was due to differences over pricing. The merchant bankers suggested price below Rs 20, while the book value of the company is Rs 22.50. The Government intends to shed 10 per cent of its equity in RINL which is expected to give approximately Rs 2,500 crore.
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