State-owned SAIL on Friday said the finance ministry has given its in-principle approval for 20 per cent disinvestment of the steel giant.
The divestment comprises 10 per cent equity dilution by the government and the company issuing additional 10 per cent shares.
"...Ministry of Steel has communicated to the company 'in principle' approval of the Department of Disinvestment for further public offer equivalent to 10 per cent of existing paid-up equity capital by SAIL," the company said in a filing to the Bombay Stock Exchange.
It further said that the finance ministry has also given its approval for disinvestment of "equivalent size of equity held by the government of India in two discrete tranches, each containing five per cent of FPO plus five per cent offer for sale".
However, the company said that the proposal would be subject to approval of the Cabinet. "This is subject to fulfillment of certain conditions, including obtaining approval of the Cabinet Committee on Economic Affairs."
The timing of the stake sale and public offer would be decided after CCEA nod, it said.
"After approval of CCEA, the timing for the above offers would be decided considering, inter-alia, SEBI guidelines and prevailing market considerations and also fulfilment of conditions, if any, stipulated in the CCEA approval," the filing added.
Steel Minister Virbhadra Singh had said the process of disinvestment in the company is likely to start in the current fiscal.
The government is likely to raise around Rs 8,000 crore through the disinvestment at current share prices. The amount raised would go to the National Investment Fund created mainly to finance social sector.
SAIL, which will also raise about Rs 8,000 crore through two-phase FPO, will use the fund to part finance its Rs 70,000-crore expansion projects to increase its annual production capacity to about 23 million tonnes by 2012.
The proposed FPO would bring the government's holding in the company down to about 68 per cent from over 85 per cent at present.
SAIL's share prices today closed 0.41 down at Rs 181.95 on the Bombay Stock Exchange from its previous close.
