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SAIL's share sale is proposed to take place through a two-phased FPO, which will see the government selling 10% of its equity in the company and the steel giant raising fresh equity in the same proportion
The steel ministry on Tuesday said that it will send the 20% share-sale proposal of the country's largest steel maker Steel Authority of India Ltd (SAIL) to the Union Cabinet this week, reports PTI.
"The share-sale proposal of SAIL will be sent to the Cabinet this week. Thereafter, the Cabinet secretary will take a final call on it," steel secretary Atul Chaturvedi told reporters on the sidelines of a conference to announce the price band of NMDC Ltd's follow-on public offer (FPO).
SAIL's share sale is proposed to take place through a two-phased FPO, which will see the government selling 10% of its equity in the company and the company raising fresh equity in the same proportion.
"The first phase is expected to happen in 2010-11 and the next in 2011-12, but both would be based on the market conditions," Mr Chaturvedi added.
The government holds a little over 85% equity in SAIL.
The Union government plans to raise the money to part fund its massive social and infrastructure programmes while the steel maker would partly finance its Rs70,000-crore expansion plan through the share-sale proceeds.
"(The) share sale is expected to fetch Rs8,000 crore in each phase collectively to the government and the company. Thus, the total proceeds of the FPO could be around Rs16,000 crore," he said.
The final amount would, however, depend on the price the government fixes for the FPO. Share sale in Satluj Jal Vidyut Nigam, earlier scheduled for the current fiscal, will now be initiated in the next fiscal.
Besides, the Cabinet has given its nod for further stake sale in Engineers India.
As per the Cabinet decision, all listed profitable public sector units (PSUs) should have a public holding of at least 10% and all profitable unlisted PSUs should be listed over the next few years.
According to these criteria, as many as 60 state-run companies are eligible for disinvestment.
Earlier, revenue secretary Sunil Mitra, former disinvestment secretary, had said that the department expected some of the big PSUs like Coal India, Bharat Sanchar Nigam Ltd (BSNL) and SAIL to be divested in the next fiscal.