Share deal: The sale will reduce Government’s stake from 85.82 per cent to 68 per cent
INDIA’S steel ministry has approved a plan to sell shares in state-run Steel Authority of India Limited (SAIL) to help fund the firm's expansion and cut the government deficit. The two-phased sale would be a mix of a government stake sale and an issue of fresh shares by the company, Dow Jones Newswires reported today, quoting an unidentified senior steel ministry official. “We plan to seek the cabinet's nod for it in over a month’s time,” the official said. The report comes as the government considers minority stake sales in various state-run firms - from NTPC, India's biggest thermal power generating company, to miner Manganese Ore India - to raise funds to cut the hefty fiscal deficit. The stake sale and issue of fresh shares in SAIL, India's largest steel producer by volume, would cut the government's holding to around 68 per cent from 85.82 per cent. In the first phase, the government would sell five per cent of its shareholding while SAIL will issue an additional five per cent equity, the report said. The government plans to sell a total of 10 per cent of its holding, while the company is expected to issue additional shares worth 10 per cent of the expanded equity base, the official said. The amount of money to be raised from the share sale would be fixed after cabinet gave its approval, said the official. The timing of the share sale would be announced later.
SAIL plans to raise its annual hot metal production capacity to 23.5 million metric tonnes by the financial year ending March 2012 from the current 14.6 million tonnes. The steel ministry official said SAIL will use the share sale money to partly fund its expansion.
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