The Telegraph
Friday , June 6 , 2014
CIMA Gallary

Selloff in SAIL back on menu

New Delhi, June 5: The steel ministry wants to go ahead with a 5-10 per cent stake sale in Steel Authority of India Ltd, a plan put on the back-burner by the previous government.

The government holds an 80 per cent stake in SAIL after a divestment in March 2013.

The previous UPA government had planned to divest about 10.82 per cent stake in SAIL but later pruned the offering to 5.82 per cent after the stock market started sliding.

The SAIL stock price fell from Rs 90.60 a share on January 1, 2013 to Rs 64.05 a share by March 20, 2014, two days before the stake sale.

Market reports suggest that the stock sale, which fetched Rs 1,517 crore, had to be rescued by government-run companies with the LIC buying about 40 per cent of the offering and the State Bank of India another 10 per cent.

With the stock market on a roll now, the government wants to revive the proposal. SAIL shares closed at Rs 107.05 apiece on the BSE today.

At current prices, a 5 per cent stake sale could fetch the government Rs 2,200 crore; a 10 per cent sale would fetch Rs 4,400 crore.

The long-term plan of the ministry is to reduce government holding in public sector enterprises to 51 per cent and unlock resources for national development.

However, officials said that to maximise earnings, the divestment has to be in phases and not in one go.

Steel ministry officials said they would go ahead with the first tranche of SAIL’s divestment soon after the budget session of Parliament.

Between 2008 and now, SAIL has undertaken a modernisation and capacity expansion plan to nearly double its capacity to 22 million tonnes.

The investment has acted as a boost to eastern India’s economy at a time most other entrepreneurs have refrained from investing in a big way.

CIL revamp

Deloitte, which was selected to study the restructuring of Coal India, has recommended reforming the company and its nine subsidiaries through “internal changes in structure, systems and roles”.

The consultancy said the coal ministry could set up independent mega regional companies or create independent entities while keeping the holding company intact during the transition.