SAIL FPO to retail buyers: Govt may offer discount

Keen to draw a good response to its share sale in SAIL, the government may offer a special discount of five per cent to retail buyers and employees of the state-owned firm on the issue price of the FPO.

"We can offer 5 per cent discount to retail investors and SAIL's employees in the Follow-on Public Offer," steel secretary Atul Chaturvedi told PTI.

He, however, enthused confidence that SAIL's share sale would elicit more response from investors than the response to the follow on offers of PSUs such as NMDC, NTPC and REC that too offered discounts to retail investors and employees.

"A road map would be prepared for the FPO which would go into the nitty gritties," he said without giving any detail about the quantum of shares to be issued and its timing among others.

SAIL shares were trading at Rs 236.10, up 0.68 per cent on the Bombay Stock Exchange in the afternoon session.

The two-phased 20 per cent share sale programme, which was approved by the Union Cabinet last Thursday, may generate a total of Rs 16,000 crore (Rs 160 billion) as proceeds.

Both the phases of the FPO may see SAIL and government selling five per cent equity each -- while a total of 10 per cent shares could be sold in the current fiscal with the remaining during the next fiscal.

"The timing of the FPO would soon be decided. Depending on the market condition, we can also tweak the composition of the FPO. Government could sell its 10 per cent in one go while the company may raise equity in two phases," Chaturvedi added.

The government at present holds a little over 85 per cent stake in SAIL and post FPO its equity in the company is expected to go down to about 69 per cent.

The steel major is looking to part fund its Rs 70,000-crore (Rs 700-billion) expansion programme to take the annual production capacity to about 23 million tonnes from the current 14 million tonnes.

SAIL is also working on its ambitious plans to buy out coking coal properties abroad through a special purpose vehicle -- International Coal Ventures Ltd -- to feed the expanded capacity.

The steel maker is self sufficient in meeting iron ore requirements but not coking coal.

Also, it is in the process of forging alliance with South Korean steel giant Posco to foray into specialised steel products like autograde steel among others.

The government on the other hand aims to partly finance its massive infrastructure and social sector programmes by the proceeds of the FPO.

The ministry of finance has already targetted to raise Rs 40,000 crore (Rs 400 billion) through disinvestment in different public sector units, including SAIL, Hindustan Copper and Coal India during the current fiscal.