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| Poor show forces govt to scale down PSU stake sale |
| Vrishti Beniwal / New Delhi Apr 26, 2010, 00:23 IST |
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Divestment in 8 firms this year; dept may miss Rs 40,000-crore target.
With recent issues from state-run companies receiving lukewarm response from the markets, the government has downscaled its disinvestment programme this year, restricting it to a maximum of eight companies.
This is in contrast to the government's earlier announcement of coming out with one public issue every third week in 2010-11. The downscaling could make it difficult for the disinvestment department to meet its target of raising Rs 40,000 crore this year.
“We are looking at disinvestment of seven to eight companies this year. It would not be possible to work on more public issues in one year. The market should also be ready to accept the issues,” said an official in the finance ministry, who did not wish to be identified.
A significant part of the disinvestment target would be met through stake sales in companies such as Coal India Ltd (CIL) and Steel Authority of India Ltd (SAIL), he added.
Other big issues could come from Bharat Sanchar Nigam Ltd (BSNL) and MMTC, while Hindustan Copper, Manganese Ore India Ltd (MOIL), SJVNL and Engineers India Ltd (EIL) would be smaller issues.
The fate of some of the big issues, however, hangs in balance. The disinvestment department is struggling to find the right valuation for trading company MMTC and this could take the company off the disinvestment list this year. BSNL and CIL are facing opposition from trade unions.
Though CIL said it had reached an agreement with the unions for the proposed IPO, the issue of disinvestment in BSNL will be referred to a Group of Ministers. The profitability of the telecom firm has also taken a hit over the past few years, in which 10 per cent stake was earlier valued at Rs 10,000 crore.
So far, SAIL is the only issue to have got Cabinet nod for disinvestment this year. The government plans to raise Rs 8,000 crore through dilution of 10 per cent equity in SAIL in two tranches, while the company will raise an additional 10 per cent by issuing fresh shares.
Among the smaller issues, the government is looking at raising Rs 5,000 crore from Hindustan Copper, Rs 500 crore from MOIL and Rs 1,200 crore each from SJVNL and EIL.
Last year, the government had raised Rs 23,552 crore be selling its stake in five companies, leaving it short by Rs 1,448 crore from a target of Rs 25,000 crore. NMDC was the biggest issue in 2009-10. The government mopped up Rs 8,480 crore from it, followed by Rs 2,247 crore from Oil India Limited, Rs 2,012 crore from NHPC and Rs 882 crore from Rural Electrification Corporation Ltd.
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