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Govt refuses to fix timeframe for much-delayed SAIL FPO

Govt refuses to fix timeframe for much-delayed SAIL FPO
PTI
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First Published: Fri, Aug 26 2011. 01 48 PM IST
Updated: Fri, Aug 26 2011. 01 48 PM IST
New Delhi: Amid volatility in the stock markets, the government on Friday refused to give a timeframe for the much-delayed share sale of state-run SAIL, while expressing hope that the FPO of the Maharatna company would happen in the current fiscal.
“It has to be at the appropriate time when the stock market is in good condition. Right now, the stock market is going up and down... We still intend to go through with the (FPO) issue this financial year,” steel secretary P. K. Misra told reporters here on the sidelines of a CII conference.
The FPO of Steel Authority of India Ltd (SAIL), in which the government holds a stake of a little over 85%, has failed to meet deadlines repeatedly since December last year due to several reasons, like rising coking coal prices and problems with merchant bankers, besides the adverse market conditions.
Shares of the company have plunged by over 43% since the beginning of this year, according to data available on the Bombay Stock Exchange.
The company’s scrips were trading at Rs104.25 apiece on BSE at 01:20 pm, down 2.52%.
In July, steel minister Beni Prasad Verma had said the follow-on-public offer (FPO) of the state-run steel giant may take place around Diwali.
Through the share sale, the government will divest a 5% stake in SAIL, while the company will issue fresh equity in the same proportion under the FPO.
Higher coking coal prices had resulted in an over 28% decline in net profits of the company for the April-June quarter to Rs838.06 crore.
For the full year, its net profit declined by 29% to Rs4,914.29 crore vis-a-vis the year-ago period. Coking coal prices had an adverse impact of Rs3,015 crore on the profits of the company for the year as a whole.
The government’s disinvestment target for the previous fiscal also got hit due to the delay in SAIL’s share sale. It could only raise over Rs22,000 crore against a target of mopping up Rs40,000 crore through divestment in state-owned firms.
Adverse market conditions have also played spoilsport for the government, as so far, it has only managed to mop up around Rs1,100 crore this fiscal from the sale of 5% equity in Power Finance Corporation, which was the first follow-on public offer of a PSU in the current fiscal.
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First Published: Fri, Aug 26 2011. 01 48 PM IST
More Topics: SAIl | FPO | Public issue | Shares sale | Stock markets |