India's government is to sell a stake in state-run steel giant SAIL, the steel ministry said on Wednesday, as part of an ambitious disinvestment plan to reduce the country's deficit. The government will sell a 5.82 percent stake, or 240.4 million shares, in Steel Authority of India (SAIL), the ministry said in a statement.
The share auction will be held Friday through an online bidding process, said the statement, which did not disclose pricing details. At current market capitalisation, the stake could be worth $280 million to $300 million, a steel analyst told AFP, declining to be named. SAIL is the world's 14th-largest steel producer with annual output of 13.5 million metric tons. The government held road shows throughout South Asia, the United States and Europe to assess investor appetite for the sale of the stake in SAIL, which has been hurt by sluggish business demand that has hit sales growth.
It reported a 23 percent year-on-year decline in third-quarter net profit to 4.8 billion rupees ($88 million) for the three months to December. Analysts were cautious about demand for Friday's public offering due to a weak overall global business climate that is affecting SAIL's fortunes.
"It (the sale) will be a tough task in current market conditions," the analyst said. The sale is part of a government drive to reduce the budget deficit, which is set to reach 5.2 percent of gross domestic product in this financial year to March 31, 2013. Earlier this week, a local media report said the government planned to "speed up" the sale of a 10 percent stake in the world's largest miner Coal India, which could help raise 200 billion rupees ($3.7 billion). Last month, the government raised $570 million by selling 10 percent of its stake in state-run refinery Oil India, on strong demand from foreign investors.
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