With poor sentiment in the stock market, the Government has deferred offloading its stake in the National Mineral Development Corporation (NMDC). It also said the process for completing disinvestment in steel major SAIL will take “some time.”
“We are getting a sense that we will not get good value. So that is why, it has been decided not to pursue the process for the time being,” a highly placed Government source told Business Line .
The Government plans to divest 10 per cent of its 90 per cent holding in the company. NMDC is one of the 15 companies mentioned as probable candidates for disinvestment during the recently held road shows for Qualified Foreign Investors (QFIs). Earlier in March 2010, the Government offloaded 8.38 per cent stake in NMDC, which fetched over Rs 9,900 crore.
Retail investors were allocated shares at Rs 285 each, while for others, the price was Rs 300 a share. NMDC’s share price closed at Rs 191.90 (at BSE on August 29). Now the company, in a notice to stock exchanges on August 16, has sought shareholder’s approval for an enabling proposal for a buy back. That has pumped up the shares slightly.
The Government aims to mobilise Rs 30,000 crore through disinvestment this year. It planned to kick start the process with Rashtriya Ispat Nigam Ltd, but postponed it citing poor market conditions.
SAIL
The source also added that the disinvestment process in SAIL will take some time. On July 20, the Cabinet Committee on Economic Affairs (CCEA) approved the disinvestment of 10.82 per cent equity of SAIL out of Government of India’s shareholding of 85.82 per cent. This has to be done through an ‘Offer of Sale’ of shares through stock exchanges.
“We had the first meeting recently for appointment of merchant bankers. We feel that the entire process will take 3-4 months to complete,” the source added. Though the disinvestment is to be done through auction method, which does not require exhaustive road shows etc, still, some formalities have to be completed, the source explained.
SAIL’s share slipped over five per cent to close at Rs 78 on Wednesday.