Modern Foods is the first state-run company in which the government had decided to off-load majority stake, reversing the earlier decision to divest only 50 per cent stake.

Meanwhile, the government has mandated four merchant bankers including Kotak Mahindra and DSP Merill Lynch for disinvestment in GAIL, likely to commence end January, official sources said today. The government is expected to tap domestic market only for the proposed disinvestment in Gail before January 31 and close the issue by early February. Other merchant bankers appointed for the purpose are JM Financial and Investment Consultancy Services and ICICI Securities, sources said.

Though government initially intended to sell 210 millionshares of GAIL, adverse market conditions have changed the perception and the size of issue of gas monolith would depend on book building by merchant bankers, sources said. Gail would not tap the market abroad during the current fiscal due to adverse conditions and even for the domestic issue no size has been fixed.

The government was forced to withdraw the 210 million shares Gail issue through global depository receipts (GDR) after the roadshows last year mainly on account of adverse conditions. The FIs had offered a band between Rs 115-125 per share while government had expected a price of around Rs 150 for Gas Authority of India shares.