NEW DELHI (Commodity Online): The Indian government has decided to offload 20 per cent of its stake in the public sector company Steel Authority of India Ltd (SAIL).

According to the government, SAIL will make a fresh issue of 10% equity, and the Centre will divest 10% of its stake. At current prices, the combined 20% sale would raise almost Rs 17,000 crore from the market.

The fresh issue will be used to part-finance SAIL’s Rs 70,000-crore expansion programme. Steel minister Virbhadra Singh, in a written statement to the Lok Sabha, said the disinvestment would be in two tranches of 10% each, and be a mix of fresh issue and sale of government shares.

“A proposal for raising additional equity by SAIL to the extent of 10% of the paid-up capital and disinvestment of a portion of the government of India's holding in SAIL up to 10% of the paid-up capital in two equal tranches is under consideration of the government,” the steel minister said.

At present, the government holds 85.83% stake in the company’s paid-up capital of Rs 4,130 crore.

The company will now issue 45.88 crore fresh shares in two tranches, enabling it to raise over Rs 8,500 crore at the current price. The government will also raise a similar amount by selling 10% equity.

The Union Cabinet of India may take up the proposal for 10% equity sale in December, which would include sale of 5% fresh equity of post diluted capital by the company and the sale of government holding in the same proportion.

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