SAIL Seeks 5% FPO In FY27 To Fund Expansion Plans
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SAIL is seeking approval for a 5% FPO in FY27 to raise fresh capital for its expansion and capital expenditure plans. The proposal comes after the state-run steelmaker reported a more than two-fold rise in June-quarter profit to ₹1,644 crore.
The Steel Authority of India (SAIL) is exploring a fresh share sale to raise funds for its own expansion programme, with the state-run steelmaker seeking approval for a 5% follow-on public offer (FPO) during FY27, according to people familiar with the matter.
SAIL has approached the Department of Investment and Public Asset Management (DIPAM) under the Finance Ministry with the proposal. Unlike a government stake sale, where the proceeds go to the exchequer, the proposed SAIL FPO would allow the company to raise fresh capital for its business.
Why SAIL Prefers An FPO
The proposed share sale differs from the offer for sale (OFS) route that the government has generally used for public sector disinvestment.
Under an OFS, the government sells part of its existing holding in a listed company and receives the proceeds. On the flip side, an FPO allows an already-listed company to increase the number of its shares available to the public. It sells more shares and the proceeds go to the company's accounts.
The government currently owns around 65% of SAIL. A fresh equity issue would therefore dilute its holding as the company's overall equity base increases, but it would not provide any direct proceeds to the government.
That makes the proposal different from several other disinvestment transactions planned by the Centre, where the primary objective is to raise money through the sale of government-held shares.
Funds Could Support Capex
SAIL has been stepping up capital expenditure as it works to expand production capacity at its plants. By issuing new shares, the company will raise money for launching such projects.
The proposal also comes after a strong improvement in SAIL's latest quarterly profit. The company reported a more than two-fold increase in consolidated net profit to ₹1,644.05 crore for the June quarter.
SAIL produced 4.76 million tonnes (MT) of crude steel in the quarter, compared with 4.85 MT in the year-ago period. Sales stood at 4.16 MT, down from 4.55 MT a year earlier.
SAIL's Steel Operations
SAIL is a Maharatna central public sector enterprise under the Ministry of Steel and is India's largest state-owned steel producer.
The company operates integrated steel plants in Bhilai, Bokaro, Rourkela, Durgapur and Burnpur, along with three special steel plants.
SAIL Chairman Ashok Kumar Panda said the domestic steel industry had remained resilient despite global uncertainties, supported by continued demand for steel consumption in India.
The proposed FPO is still at the consideration stage, and its final size, structure and timing will depend on approvals from the relevant authorities.
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