New Delhi, July 12: Cabinet Committee on Economic Affairs today deferred a decision on divesting 10.82 per cent government stake in SAIL as Steel Minister Beni Prasad Verma was away on an official tour.
Sources said since the minister was in Tokyo to attend an agreement signing event between SAIL and Japan's Kobe Steel, the CCEA did not think it to be prudent to take a call on the matter.
Steel Secretary D R S Chaudhary is also in Tokyo.
The follow-on public offer in SAIL is expected to fetch around Rs 4,000 crore to the government.
Verma's absence was the only reason for Cabinet deferring the proposal, they said.
Verma set out for Tokyo on July 8 and is scheduled to come back today.
On July 10, SAIL and Kobe Steel had signed the final pact for an equal joint venture aimed at setting up a 500,000 tonne iron nugget manufacturing plant in West Bengal entailing an investment of Rs 1,500 crore.
The proposal for divestment of government's stake in SAIL before the CCEA was put up by the Department of Disinvestment.
The government plans to dilute 10.82 per cent of its 85.82 per cent stake in the company aimed at mopping up around Rs 4,000 crore.
A DoD note for the CCEA stated that the Offer for Sale route would be taken for the stake dilution in the company.
It, however, did not indicate a specific time-frame for the disinvestment as the “time of the issue will depend on market conditions”.
Offer for Sale is one of the two new share-sale tools introduced by the capital market regulator Sebi in January this year, especially to help corporates raise their public shareholding.
The Government had sold stake in ONGC earlier this year through the same Offer for Sale or “auction route”, but it got a lukewarm response.
State-run insurer LIC had to step in at the last moment and it bought the majority of the 10 per cent of the oil major's stake.
The CCEA in April, 2010 had approved disinvestment of government's share in SAIL along with issue of 10 per cent fresh equity by the company in two equal tranches.
However, due to some issues with merchant bankers and volatility in the market conditions the government deferred the SAIL offer.
Subsequently, SAIL had in September last year had urged the government for de-linking of disinvestment of equity from issue of fresh equity by the company.
DoD obliged and decided to take a decision on timing of the issue after CCEA gives a fresh approval on the extent and mode of disinvestment.
The government has set a target of raising Rs 30,000 crore this fiscal by selling stakes in state-run firms.
It has already initiated the process of divesting stake in Hindustan Copper, Oil India, BHEL, HAL and RINL in the current fiscal.
The RINL initial public offering may hit the market by the end of this month.
