Amid volatility in the stock markets, the government on Friday refused to give a timeframe for the much-delayed share sale of state-run
Steel Authority of India Ltd (SAIL), while expressing hope that the follow-on public offer (FPO) of the Maharatna company would happen in the current financial year.
"It has to be at the appropriate time when the stock market is in good condition. Right now, the stock market is going up and down... We still intend to go through with the (FPO) issue this financial year," Steel Secretary P K Misra told reporters on the sidelines of a CII conference.
Rs 8,000 cr SAIL FPO was earlier to hit market in June The FPO of Steel Authority of India Ltd (SAIL), in which the government holds a stake of a little over 85 per cent, has failed to meet deadlines repeatedly since December last year due to several reasons, like rising coking coal prices and problems with merchant bankers, besides the adverse market conditions.
Shares of the company have plunged over 43 per cent since the beginning of this year, according to data available on the Bombay Stock Exchange.
TIPS to tackle stock market volatility The company's scrips were trading at Rs 104.25 apiece on BSE at 1.20 pm, down 2.52 per cent.
In July, Steel Minister Beni Prasad Verma had said the follow-on-public offer (FPO) of the state-run steel giant may take place around Diwali.
Through the share sale, the government will divest a 5 per cent stake in SAIL, while the company will issue fresh equity in the same proportion under the FPO.
Higher coking coal prices had resulted in an over 28 per cent decline in net profits of the company for the April-June quarter to Rs 838.06 crore.
Defensive stocks help during volatile markets For the full year, its net profit declined 29 per cent to Rs 4,914.29 crore vis-a-vis the year-ago period. Coking coal prices had an adverse impact of Rs 3,015 crore on the profits of the company for the year as a whole.
The government's disinvestment target for the previous financial year also got hit due to the delay in SAIL's share sale. It could only raise over Rs 22,000 crore against a target of mopping up Rs 40,000 crore through divestment in state-owned firms.
Adverse market conditions have also played spoilsport for the government, as so far, it has only managed to mop up around Rs 1,100 crore this financial year from the sale of 5 per cent equity in Power Finance Corporation, which was the first follow-on public offer of a PSU in the current year.
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