New Delhi, March 8: The government today set Rs 300-350 as the price band for the follow-on public offer of NMDC Ltd. The issue opens on March 10 and closes on March 12.

Though the band is much lower than the current market price of the NMDC scrip, capital market observers are disappointed.

“It is very expensive and selling the FPO at this price is going to be difficult. Retail investors are also unlikely to subscribe at this price,’’ Arun Kejriwal, director of KRIS, said. The NMDC scrip today ended 3.35 per cent lower on the BSE at Rs 400.60 as anxiety ruled among marketmen ahead of the pricing.

The country’s largest iron ore producer is entering the capital market with a follow-on offer (FPO) of over 33 crore shares of face value Re 1 each. Retail investors will get a discount of 5 per cent.

A group of ministers headed by finance minister Pranab Mukherjee decided on the price band this evening.

NMDC has a free float of just 1.62 per cent, and 98.38 per cent of the shares are with the government. The government is looking to offload 8.38 per cent stake in the market through the FPO.

While the portion reserved for retail investors is 35 per cent of the shares on offer, it is 15 per cent for high net worth individuals and 50 per cent for qualified institutional buyers.

If fully subscribed at the price of Rs 300 a share, NMDC will mop up about Rs 9,900 crore from the market.

For the nine-month period ended December, NMDC reported an after-tax profit of Rs 2,381.51 crore on a total income of Rs 4,882.54 crore.