Business Line reported that disinvestment of government’s shares in Steel Authority of India Ltd may take place in February. However, there is still no clarity on sell off of another steel company, Rashtriya Ispat Nigam Ltd.
A senior Government official said that “Preparation for sell off in SAIL is on, and we hope to complete this in February.”
However, a senior SAIL official said that no date has been finalized and formal intimation from the Government is awaited. Disinvestment in SAIL is likely to fetch around INR 3,500 crore to the Government.
On July 19th, the Cabinet Committee on Economic Affairs approved the disinvestment of 10.82% equity in the company. Disinvestment will bring down the Government’s holding to 75%. The process will be completed through offer for sale of shares through stock exchanges, better known as auction method.
In the current fiscal, the Government used the new mechanism while selling part of its equity in NMDC and Hindustan Copper and mobilized nearly INR 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 INR 96. On December 17th Thursday, its share closed at INR 91.45 on the BSE. There is feeling that with demand for steel picking up and good progress on modernization projects, the market price will improve in coming days.
Meanwhile, Government officials pleaded ignorance about the status of the Initial Public Offering of another steel company RINL. On October 9th, 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.
