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SAIL has  ₹32.2 billion debt due for repayment this fiscal year. Photo: Bloomberg
SAIL has 32.2 billion debt due for repayment this fiscal year. Photo: Bloomberg

Centre looks to raise 2,600 crore via 10% stake dilution in SAIL

  • DIPAM is also undertaking the strategic sale of SAIL’s Salem (Tamil Nadu) and Bhadravati (Karnataka) steel plants
  • SAIL owns and operates five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and the IISCO Steel Plant in Asansol

The government has decided to sell 10% of its stake in Steel Authority of India Ltd (SAIL) through an offer of sale route to raise 2,600 crore as part of its disinvestment drive.

“Offer for Sale (OFS) in SAIL opens on Thursday (14.1.2021) for non-retail investors. 15th January (Friday) is for retail investors. GoI would divest 5% equity with a 5% greenshoe option," Secretary, Department of Investment and Public Asset Management tweeted on Wednesday.

The share price of SAIL fell 1.8% to 74.1 on Wednesday.

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A DIPAM official said the floor price has been kept at 64. “If 100% subscribed through both base and greenshoe options, the government will raise 2600 crore and its stake in SAIL will come down to 65%," he added.

DIPAM is also undertaking the strategic sale of SAIL’s Salem (Tamil Nadu) and Bhadravati (Karnataka) steel plants though the money will go directly to the public sector enterprise. Dipam had on 4 July 2019 sought expressions of interest in the sale of the two plants.

It had appointed SBI Capital Markets Ltd as the transaction adviser following an in-principle approval from the Cabinet Committee on Economic Affairs for strategic disinvestment of several state-run companies.

SAIL owns and operates five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and the IISCO Steel Plant in Asansol. It also owns the Chandrapur ferro alloys plant and three special steel plants: Alloy Steels Plant (at Durgapur in West Bengal), Salem Steel Plant (in Tamil Nadu) and Visvesvaraya Iron and Steel Plant (at Bhadravati in Karnataka). It recorded total revenue from operations of 61,025 crore in FY20.

So far this year, the government has garnered 13,844 crore through minority stake sales and initial share sales of Mazagon Dock Shipbuilders Ltd against an ambitious target of 2.1 trillion. With most of the large ticket strategic disinvestments such as BPCL and Air India pushed to next fiscal due to the delay caused by the coronavirus pandemic, the government is unlikely to meet its asset sales target for the second consecutive year. In FY20 also, the government missed the 1.05 trillion disinvestment target by 40,000 crore.

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