New Delhi: The follow-on-public offer (FPO) of state-run steel giant Steel Authority of India Ltd (SAIL) which has been deferred twice, is expected to hit the capital market once the global coking coal prices moderate.
At present, price of coking coal, which is an important raw material for steel industry, is ruling at $330 a tonne and analysts expect this to come down to about $220-230 per tonne.
Sudden rise in the coking coal prices has put pressure on margins of the steel manufacturers, sources said, adding, this is main reason for the deferment of the SAIL FPO.
“Global coking coal prices are very high and the sudden spurt is hurting the margins of steel companies. Hence, we have delayed the SAIL FPO plan,” sources told PTI.
Moreover, the choppy stock market condition coupled with rising input cost would not have fetched desired premium to SAIL, the sources added.
SAIL FPO was to hit the market on 14 June for which it was to file final papers with market regulators Sebi on Wednesday.
The company, however, deferred the share sale offer that envisages to raise up to Rs8,000 crore.
SAIL chairman C. S. Verma had said that the FPO date would be decided on market condition and it may spillover beyond June.
“Let the market become normal and then, we will be able to tell you the dates,” Verma had said.
The FPO has failed to meet deadlines repeatedly since December last year due to unfavourable market conditions and problems with merchant bankers.
The government, holds a little over 85% in SAIL and plans to divest 5% of its holding in the first phase of the disinvestment.
In the second phase, the company would come out with fresh equity issue of 5%, which will eventually bring down the government’s stake to 69%.
The government has set a target to raise Rs40,000 crore through disinvestment in state-run firms in the current fiscal.
Shares of SAIL has plunged about 20% since the beginning of this year, as per data on the Bombay Stock Exchange.
Scrip of the company on Thuesday closed at Rs149.45 on the BSE.