Govt lowers stake sale in SAIL to 5.82%; floor price at Rs 66

The government has altered its original plan to offload 10.82 per cent in Steel Authority of India (SAIL) on poor market conditions and is believed to have fixed Rs 66 per share as the floor price for now selling 5.82 per cent stake in the steel major.

The stake sale is expected to rake in about Rs 1,564 crore at Wednesday's closing price.
 
The issue, scheduled for Friday through offer for sale (OFS) route, will be second disinvestment this month where the government has truncated issue size fearing that adverse market conditions may not help it realise original targets.

Last week, the government had pruned the issue size of Nalco to 5 per cent plus an option to retain an equal number in case of over-subscription. Finally, it garnered about Rs 628 crore by selling its 6 per cent stake in the company.

The SAIL issue would fetch the exchequer about Rs 1,587 crore at Rs 66 apiece, if subscribed fully.

Official sources said the Empowered Group of Ministers (EGoM), which met in the morning, decided to fix the floor price of SAIL OFS at Rs 66 per share, which was 2.17 per cent higher than its Tuesday closing price.

However, it trimmed the offer size to 5.82 per cent against the original plan of 10.82 per cent stake sale due to opposition from the Steel Ministry, the parent ministry of the SAIL.

Citing poor market conditions, the ministry argued that current price of SAIL scrip does not reflect its true value.

After this, the EGoM decided to scale down the size to 5.82 per cent, the sources said, adding that rest of the stake sale can happen in the next fiscal.

SAIL shares are already trading at 4-year low level and have not been part of recent market rally. The scrip has gone down by 32 per cent between April 1, 2012 and on Wednesday, when it closed at Rs 65.05 on the BSE. During the intra-day trade, the stock had touched 4-year low of Rs 64.05.

The offer will take place through a separate window on both, BSE and NSE between 9.15 am and 3.30 pm.

With PTI inputs