Govt for 20% stake sale in SAIL

The government said on Thursday it is considering a 20 per cent stake sale in steel major Steel Authority of India Limited, proceeds of which would partly fund the company's Rs 70,000-crore (Rs 700-billion) expansion projects.

Steel minister Virbhadra Singh informed Lok Sabha in a written statement that the proposed disinvestment would be carried out in two tranches of 10 per cent each and would be a mix of diluting government stake was well as issuance of additional shares by the company.

"A proposal for raising additional equity by SAIL to the extent of 10 per cent of the paid up capital and disinvestment of a portion of the government of India's holding in SAIL up to 10 per cent of the paid-up capital in two equal tranches is under consideration of the government," he said.

However, he maintained that a final decision on the proposal is yet to be taken. It is learnt that the Cabinet may take up the proposal for 10 per cent stake sale next month, which would include sale of 5 per cent government holding and issuing additional equity in the same proportion by the company.

"The funds raised from the proposed issue of fresh equities is primarily intended to be utilised for meeting a part of the capital expenditure for modernisation and expansion plans of SAIL," the minister added.

SAIL is expanding its annual production capacity from about 14 MT at present to around 23 MT by 2012.