SAIL to issue bonus shares before FPO: Sources

SAIL is likely to issue bonus shares before its follow-on public offer, sources told CNBC-TV18's Aakansha Sethi. The government has suggested a bonus issue but the company's management is yet to finalise its issue plans.

To issue bonus shares, the company's reserves have to be three times the paid-up capital. SAIL's paid-up equity capital stands at Rs 4,130 crore as on March 2009, with reserves and surplus at Rs 23,853 crore.

Sources say the bonus proposal is being discussed by SAIL and the government. The latter could be a big beneficiary if the bonus comes through. The Cabinet is yet to take call on the 10% follow-on public offer in SAIL.

As on December 2009, the government held 85.8% stake while insurance companies and foreign institutional investors held 6.3% and 4.41% in the state-run firm.