MUMBAI (Commodity Online): Giving a toss to the investors, India’s largest steel producer, Steel Authority of India Ltd (SAIL) (BOM:500113) is likely to issue bonus shares prior to the company’s follow-on public offer (FPO).
SAIL management and the government are said to be considering the issue of bonus shares. The government has suggested a bonus issue but the company's management is yet to finalize its issue plans.
To issue bonus shares, the company's reserves have to be three times the paid-up capital. SAIL's paid-up equity capital stands at Rs.4,130 crore as on March 2009, with reserves and surplus at Rs.23,853 crore.
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The Union Cabinet is yet to take call on Sail's follow-on public offer. The proposal reportedly includes sale of 10% fresh equity from the company and 10% offer-for-sale by the government. Reports suggest that the FPO is likely in the next fiscal year that begins in April 2010.
The company stocks rose on the Bombay Stock Exchange (BSE) and traded at Rs.210.05 up by 2.70% from its Monday’s close. The stock hit a high of Rs.213.50 and a low of Rs.205.95 so far during the day.
The government holding in the company stood at 85.82% as on December 2009. Sail is the latest in a list of planned sell-offs aimed at raising funds to cut India's fiscal deficit. India aims to sell stakes in about 60 firms in the coming years. The government's fiscal deficit is estimated to be at a 16-year high of 6.8% of gross domestic product by the end of March 2010.
Steel Authority Of India's net profit rose 98.7% to Rs 1675.55 crore on a 11.2% rise in sales to Rs 9697.14 crore in Q3 December 2009 over Q3 December 2008.
