Govt mulls 10% stake sale in SJVN

To carry forward its disinvestment drive in public sector undertakings (PSUs), the government is considering a 10 per cent stake sale in Satluj Jal Vidyut Nigam Ltd (SJVN), the state-owned hydropower producer.

The company, with an authorised share capital of Rs 4,500 crore, plans to offer 310 million shares of Rs 10 face value each to fetch over Rs 1,200 crore from the capital market in its maiden public issue.

“The IPO should be launched in the current fiscal. The disinvestment is planned only for government shares and the company is not going to raise any fresh equity,” said H K Sharma, chairman and managing director.

The Union government currently holds 75 per cent stake in the company, the rest being owned by the government of Himachal Pradesh. After the IPO, the Union’s shareholding in the Mini-ratna PSU would come down to 65 per cent, though there will be no dilution of state government equity.

SJVN has an installed power generation capacity of 1,500 Mw from the Nathpa Jhakri power project in HP. The company plans to add another 4,500 Mw capacity from six projects expected to be set up by 2020.

This would be the second power PSU to go to the stock market, after the largest hydro power producer, NHPC Ltd, announced its IPO last week to raise over Rs 6,000 crore from the market.

Prior to NHPC, Rural Electrification Corporation Ltd had opted for a stake sale and raised Rs 1,600 crore in an IPO in February 2008. The issue did well, though the market had started its slide by then and a number of private companies, including Wockhardt and Emaar MGF, had to withdraw their IPOs.

The government plans to use disinvestment proceeds from the stake sale of major PSUs to bridge the fiscal deficit. In his Budget speech earlier this year, Finance Minister Pranab Mukherjee had said, “While retaining at least 51 per cent government equity in our enterprises, I propose to encourage people’s participation in our disinvestment programme.”

Though the government has set a conservative target of Rs 1,120 crore from disinvestment of its equity during 2009-10, there are other contenders in the disinvestment queue. Coal minister Sriprakash Jaiswal had announced Coal India Ltd’s IPO recently. BSE-listed BHEL is also expected to come up with a follow-on issue shortly.