FPO will happen by early February, says SAIL

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FPO will happen by early February, says SAIL

CS Verma, Chairman, Steel Authority of India (SAIL) says, the FPO will happen by early February 2011 and it is premature to talk about price.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS India consortium names adviser for Riversdale due diligence Accumulate SAIL; target of Rs 214: Fairwealth Securities Buy SAIL; target of Rs 202/ 214: Aditya Birla Money SAIL BSE | NSE 23/05/12 Are Mutual Funds betting on SAIL?

There are reports that International Coal Ventures (ICVL), a consortium of Indian state-run companies, is contemplating counter-bid for Riversdale.

In an interview with CNBC-TV18, CS Verma, Chairman, Steel Authority of India (SAIL) and ICVL says that they will make a decision on the Riversdale bid in two weeks. "We have appointed Citigroup for advice on Riversdale bid," he informs.

Commenting on the follow-on public offer of SAIL, Verma says, it will happen by early February 2011. "It is premature to talk about price of the FPO," he adds.

On the recent JSW Steel-Ispat deal, he says, the company was never interested to acquire stake in Ispat Industries.

According to Verma steel prices are slated to go up on surging raw material costs. However, he adds that the hike will depend on market conditions.

Below is a verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: The first question of investors of SAIL and other steel companies want to know is whether you along with other public sector companies are contemplating counter bid for Riversdale at all. We understand that IVCL, which is a consortium of some PSU companies, was looking very seriously Riversdale?

A: Yesterday, we had a board meeting of International Coal Ventures Limited. Our board had decided that we will carry out the due diligence of the proposal. For this purpose we have pointed Citi Group to carry out the due diligence of the proposal. Citi Group will give its report in next two weeks time. After that we will take a view and we will decide the action plan.

Q: Given that Rio has already had a Call option on 15% of the stake, about 14.9%, Tata Steel owns about 24%, don't you think it will be a bit delayed now to act on a offer from Rio or you think you still have a decent enough chance despite these players having a substantial chunk of Riversdale already?

A: Rio's offer of USD 3.9 billion, it had been represented by the board of Riversdale to the shareholders. Now, the shareholders meeting will be after 30 days, so we still are very much in time. Our report will be available in two weeks time, so still time is there for us. So, let us see what our merchant bankers, who are carrying out due diligence of the proposal, have to say.

Q: How are the stakes split up between you and the other public sector companies who are in ICVL?

A: SAIL and Coal India, we are holding 27.5% each and NTPC, NMDC and RINL hold 14% each.

Q: More on the FPO, there is this talk in the market that the merchant bankers have been given an indicative price of Rs 160-170 that would mean you would end up raising about Rs 14,000 crore , both the government and the company split say about Rs 7,000 crore each, would that be a broad figure?

A: Nobody has given any price of the FPO, it's too premature. We are yet to file the prospectus with SEBI which we will be doing in the next two weeks time. So, we cannot say about pricing and all that it's too premature.