SAIL share sale fully subscribed, govt raises Rs 1,500 cr

The disinvestment in the nation's largest steel producer, Steel Authority of India Ltd (SAIL), has fetched the government over Rs 1,500 crore after being fully subscribed, albeit with help from state investors.

The Offer For Sale (OFS) barely managed to scrape through and received bids for 24.13 crore shares against 24.03 crore shares on offer, according to the data available with the Bombay Stock Exchange (BSE).

The government had fixed the floor price for the issue at Rs 63, a 1.41 per cent discount to Thursday's close. Shares of SAIL on Friday closed at Rs 63.40, down 0.78 per cent on BSE.

The indicative price, which is the weighted average price of all valid bids, was Rs 63.07 a share. At this price, the government would garner over Rs 1,500 crore.

"We are expecting around Rs 1,500 crore," Disinvestment Secretary Ravi Mathur said.

SAIL stake sale was the last disinvestment for the current financial year.

With this, proceeds from PSUs stake sale in this fiscal would go up to around Rs 23,800 crore, the highest ever realisation on disinvestment front in a single year. However, it would be a tad less than the revised estimates of Rs 24,000 crore.

The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, earlier this week decided to halve the SAIL offer size to 5.82 per cent from the earlier planned and Cabinet-approved 10.82 per cent, amid a weak trend at the stock market.

SAIL stock has lost 8 per cent in the last one week and over 30 per cent since March last year. The steel major has a cash balance of over Rs 6,000 crore and have a net worth of over Rs 40,000 crore.

The government held 85.82 per cent stake in the company.

For the third quarter ended December 31, 2012, SAIL reported 23 per cent decline in net profit at Rs 484 crore from the year-ago period mainly due to lower net sales realisation amid subdued market conditions.

SBI Caps, Kotak Mahindra and Deutsche Bank acted as merchant bankers for the share sale.

Bids for over 5.63 crore shares were with 100 per cent margin, meaning if a bidder decides to withdraw later he can do so. Over 18.49 crore shares attracted bids with zero per cent margin, according to the NSE data.

The government has sold stake in seven companies - NMDC, Hindustan Copper, Oil India, NTPC, RCF, Nalco and SAIL - in the current financial year ending March 31.

The proceeds from disinvestment would help the government bridge its fiscal deficit which is estimated to be 5.2 per cent of GDP in 2012-13.

With inputs from PTI