Govt mulls SAIL FPO

The government is considering the proposed public offer of state-owned Steel Authority of India Limited, proceeds of which will be used to part fund the steel giant's Rs 70,000 crore (Rs 700 billion) expansion project.

"The matter of follow-on public offer is under the consideration of the ministry of steel," an official familiar with the matter said. The steel maker is looking to come out with the public offer soon but is awaiting clearances from the ministry.

SAIL chairman Sushil Kumar Roongta had recently said the company was looking to issue additional equity in the market.

Earlier this month, Steel secretary P K Rastogi had said the ministry was discussing the matter of raising funds with the SAIL authorities either by way of borrowings or FPO.

FPO is a way of raising funds by offering additional shares after a firm has had an initial public offering.

The government currently owns 85.82 per cent stake, while 4.59 per cent is with the Life Insurance Corporation and the rest is with the public.

The steel major has a capital expenditure programme of about Rs 10,300 crore (Rs 103 billion) for the current fiscal.

SAIL is in the process of expanding its annual production capacity to about 23 million tonnes by 2012 from the present 14 million tonnes.