Govt gets Rs 620 cr from Nalco share sale

The government on Friday raked in over Rs 620 crore through sale of its 6 per cent stake in aluminium producer Nalco, taking it closer to its disinvestment target for the fiscal.

Nalco share sale, whose size was pruned to 12.88 crore shares or 5 per cent plus an option to retain an equal number in case of over-subscription, managed to get bids for 15.69 crore or 6 per cent of government shareholding.

The government, which priced the issue at a discounted price of Rs 40 a share, decided to retain all of additional bids for over 2.81 crore shares that came in.

The auction, which started in the morning, had received bids for over 15.69 crore shares, against an offer of over 12.88 crore shares, according to stock exchanges' data.

The indicative price, which is the weighted average price of all valid bids, was Rs 40.05 a share. At this price, the government would garner over Rs 620 crore.

The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, on Wednesday cleared stake sale of 25.77 crore shares, or up to 10 per cent, in Nalco through the Offer For Sale (OFS) route.

The government had structured the issue in this way as it was not very confident about the demand, sources said, adding that the disinvestment department was not very happy with the response to the offer.

Shares of Nalco closed at Rs 40.35, down 8.81 per cent over previous close on the BSE. During the day trade, Nalco scrip fell to a low of Rs 40.30.

Bids for over 4.08 crore shares were with 100 per cent margin, meaning if a bidder decides to withdraw later he can do so. Over 11.60 crore shares attracted bids with zero per cent margin, according to the NSE data.

The number of shares on offer is lower than what the Cabinet Committee on Economic Affairs (CCEA) had approved for in September last year. The CCEA had cleared a 12.5 per cent stake sale in the Navratna PSU.

The proceeds from Nalco stake sale would help government bridge the fiscal deficit. The government estimates to collect Rs 24,000 crore from disinvestment in the current fiscal and has already raised over Rs 21,800 crore so far.

The government holds 87.15 per cent stake in Nalco.

The stake sale was deferred in November last year as the government wanted to wait for the company's third quarter earnings to get a better valuation.