The government on Thursday announced that its stake in National Thermal Power Corporation will reduce marginally by five per cent subsequent to its public offering to raise capital.

"NTPC has filed a prospectus with the Securities and Exchange Board of India to raise capital through a public issue. Consequently, the government's holding in NTPC will be marginally diluted," Finance Minister P Cidambaram said while presenting the Budget for 2004-05.

Chidambaram also said that NTPC and some other cases, which are under examination, are expected to yield a sum of Rs 4,000 crore (Rs 40 billion) in the current financial year.

NTPC is likely to hit the market in the first week of August, targeting to raise upto Rs 2,000 crore (Rs 20 billion).

NTPC is hoping to get the green signal from Sebi by July 15 based on the draft red herring prospectus submitted about a week ago, company sources said in New Delhi.

The book value of NTPC shares of Rs 10 face value was hovering around Rs 45 with an earning per share of Rs 6.

According to analysts, with strong fundamentals of the corporation, NTPC could raise upto Rs 2000 crore for five per cent equity at Rs 432 crore (Rs 4.32 billion).

NTPC has planned to offer 50 per cent of the shares to qualified institutional buyers while rest to be allotted to high networth individuals and retail in equal proportion of 25 per cent.