The Government has decided to sell 5.82 per cent of its equity in Steel Authority of India Ltd (SAIL) at a floor price of Rs 63 a share. The sell off will take place on Friday.

At this price, the Government is expected to get Rs 1,514.5 crore. This will take the total amount earned through disinvestment during 2012-13 to around Rs 23,900 crore. The Government has revised the disinvestment target to Rs 24,000 crore from Rs 30,000 crore as proposed in last year’s Budget.

The floor price is 1.40 per cent less than the share’s closing price of Thursday – it closed the day at Rs 63.90 with a loss of 1.77 per cent. On the day, the share touched a new 52-week low at Rs 63.55 on the BSE.

In an unusual move, a high powered ministerial panel met for the second time in two days to deliberate on the pricing of the offer as the stock slumped 8 per cent in the past one week. The Empowered Group of Ministers (EGoM), headed by Finance Minister P. Chidambaram, is believed to have on Wednesday decided on the pricing of the issue and a formal announcement was expected after the close of market hours on Thursday.

A departure

But departing from the practice followed in previous disinvestments, the panel met again today, apparently perturbed by the volatility in the stock. It has lost more than 30 per cent since March last year.

The stake sale will take place through ‘offer-for-sale’ through stock exchanges which is also known as auction method. The Government has truncated the size of issue by almost half. The Cabinet Committee on Economic Affairs had approved the sale of 10.82 per cent. Now there is no clarity when the remaining 5 per cent of equity is to be offloaded.

The Government had received the Cabinet approval for the SAIL disinvestment in July last year, but could not be taken forward amid the subdued market conditions. The Centre had kept the issue on hold anticipating buoyancy in the market to return.

SAIL shares have not been part of the market rally during 2012. The stock, which was trading around Rs 115.90 in February last year, has been losing ground ever since talks of disinvestment surfaced.