Misra: Ushering change

Calcutta, Oct. 6: The Centre has approved a plan to restructure the board of Steel Authority of India Ltd (SAIL) ahead of its follow-on public offer (FPO).

The move will help the company to appoint the required number of independent directors to meet the norms, before the float, which is slated for later this fiscal.

Listing norms mandate that half of the company’s board should consist of independent directors.

At present, the SAIL board has 16 members though it can accommodate 24. This number will be trimmed to 14 with seven independent directors.

Last year, SAIL had proposed to bring down its board strength to 18 from 24 to expedite decision-making.

“The government has approved the proposal to reduce SAIL’s board size to 14 members, which will include seven functional and seven non-functional (independent) directors. The restructuring of the board will definitely give a fillip to the SAIL offer,” steel secretary P.K. Misra told PTI.

At present, eight posts of independent directors are vacant. The company has 12 functional directors but only four independent directors.

Now, the SAIL board will include five directors from the company and two government observers, as official nominees. “If need be we can propose to add two functional and two independent directors on the SAIL board,” Misra said.

The managing directors of the five plants would now be called CEOs and be permanent invitees at board meetings.

Company sources said two more functional directors were likely to join soon. They will be in charge of raw material and logistics and projects.

“Both the areas need special attention. Raw material and logistics will be vital for the company’s future growth. So there will be a director. Accordingly the organisation will be re-aligned internally,” sources said.

The other director’s post will be dedicated to “projects” given that the company will be continuously involved in new ventures.

SAIL has ambitious plans to scale up production and forge joint ventures with international majors such as Posco of Korea and Kobe Steel of Japan.

The PSU is now in the process of appointing the requisite number of independent directors to meet the regulatory requirements for launching the first phase of the offer, which is expected to raise about Rs 8,000 crore.

Overall, the 20 per cent FPO will see the government divesting its 10 per cent stake in the company, while the steel major will issue shares in the same quantity.

“The government is evaluating when to launch the FPO. We are still looking at December as an option or else the FPO may come in January-February,” Misra said.