National Aluminium Sinks on 4-Year Low Sale Price: Mumbai Mover
National Aluminium Co. (NACL), India’s second-largest maker of the lightweight metal, plunged the most in more than a year after the government said it would sell shares today at a price last seen four years ago.
The shares of the state-controlled company declined as much as 8 percent to 40.55 rupees and traded at 40.90 rupees as of 10:42 a.m. in Mumbai. The government, which set a minimum price of 40 rupees yesterday, is selling 128.9 million shares, with an option to double the offering on demand.
Government asset sales at discounted prices have eroded stock values, as Prime Minister Manmohan Singh’s administration seeks to bridge the widest budget deficit among the biggest emerging economies. The minimum price for shares in NTPC Ltd., India’s biggest utility, was set at 145 rupees on Feb. 6, the day the stock closed at 151.80 rupees.
“One-day share sales have been a disaster for existing shareholders,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “By offering discounts, the government is directly or indirectly stealing the wealth of existing investors.”
India plans to raise 240 billion rupees ($4.43 billion) from asset sales this fiscal year to pay for subsidies and investments in public welfare. The government owns 87.15 percent of Bhubaneswar-based National Aluminium.
Finance Minister Palaniappan Chidambaram last month trimmed the nation’s share sale target by 20 percent to 240 billion rupees for the year ending March 31. India has sold shares in companies including NTPC, iron ore miner NMDC Ltd. and oil explorer Oil India Ltd.
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