National Aluminium Share Offer Oversubscribed as Stock Slumps

National Aluminium Co., India’s second-largest maker of the metal, received demand for more stock than offered as the sale price last seen four years ago attracted investors.

The one-day sale today got bids for 156.94 million shares, compared with the 128.9 million offered, according to data from the National Stock Exchange. The shares plunged 8.5 percent to 40.35 rupees, the lowest price since November 2008. The government set a minimum price of 40 rupees yesterday.

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.”

The number of shares can be doubled on demand, according to the sale document.

India plans to raise 240 billion rupees ($4.4 billion) from asset sales this fiscal year to pay for subsidies and investments in public welfare. The government currently 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. this fiscal year.