The government may miss the target of garnering Rs 40,000 crore through disinvestment as SAIL’s follow-on public offer is now expected to hit the market in the next fiscal due to volatile stock market.
“No, no… we will wait. There is very less time left in this fiscal. We are looking at market conditions,” Steel Minister Beni Prasad Verma said when asked whether SAIL FPO would hit the market before March 31.
Moreover, Steel Authority of India Ltd’s (SAIL) public offer is slated to hit the market only after ONGC’s share sale and this may leave little resources in the hands of investors to subscribe to two big-ticket disinvestment issues.
The Government has raised over Rs 22,000 crore through selling equities in the PSUs so far and has been banking on issues of ONGC and SAIL to meet its target of raising about Rs 40,000 crore through stake sale.
The ONGC issue, likely to open on March 15, is expected to fetch about Rs 13,000 crore, while SAIL share sale was planned to garner up to Rs 8,000 crore.
The Steel Ministry feels that amid highly volatile stock markets, time available for the SAIL’s share sale is very limited in this financial year as it is lined up post ONGC FPO.
“We are ready… the issue will come as market conditions improve but 15-20 days time will be required before going to the market,” Steel Secretary P K Misra had said earlier.
Since beginning of 2011, the Bombay Stock Exchange benchmark Sensex has gone down by about 11.42 percent due to a host of national and international issues like 2G Spectrum scam and Egypt crisis.
The bearish run has also caused the SAIL scrip to decline by about 14.79 percent since then.
The company shares closed at Rs 160.15 a piece on Friday last week against a close of Rs 187.95 on January 3 this year.
In this fiscal, the government raised over Rs 15,000 crore by listing Coal India on the bourses, while issues of Powergrid Corporation, MOIL, Engineers India, Shipping Corporation and Satluj Jal Vidyut Nigam Ltd took the disinvestment proceeds to over Rs 22,000 crore.
However, rise in crude oil prices scuttled the government plans of raising money through follow-on public offer of Indian Oil Corp and it has now been postponed indefinitely. Issue of Hindustan Copper, earlier scheduled for December, was also deferred due to volatility in the markets.
Last year, the government had raised about Rs 25,000 crore by selling its stake in PSUs like Oil India, NTPC, NMDC among others. Finance Minister Pranab Mukherjee, in his budget speech of 2010, had raised the target to Rs 40,000 crore.