CCEA likely to consider STC, ITDC stake sale proposal tomorrow

The disinvestment department has sought Cabinet nod to offload 5% stake in ITDC, 1.02% in STC

The Cabinet Committee on Economic Affairs (CCEA) is likely to take up the proposal for disinvestment in State Trading Corporation (STC) and ITDC its meeting tomorrow.

The disinvestment department has sought Cabinet nod to offload 5% stake in India Tourism Development Corporation (ITDC) and 1.02% in STC through the Offer For Sale (OFS) route.

"STC, ITDC disinvestment proposal is on the agenda of meeting of CCEA scheduled tomorrow," sources said.

However, as Finance Minister P Chidambaram is out of country, it is not very clear whether the CCEA will take up the disinvestment proposal in his absence.

The government expects the sale of 5% stake or 42.88 crore shares in ITDC to fetch Rs 23.58 crore.

Besides, it aims to garner about Rs 10 crore through disinvestment of 1.02% or 6.13 crore shares in STC.

Government currently holds 92.11% stake in ITDC and 91.02% stake in STC.

The stake sale would help both the companies meet the minimum 10% public holding norm of market regulator Securities and Exchange Board of India (Sebi).

The government is required to bring down its stake in these two companies to 90% by August 8.

At the end of 2012-13 fiscal, the paid up capital of ITDC stood at Rs 86 crore and earned a net profit of Rs 19 crore.

For STC, the paid up capital stands at Rs 60 crore and net profit at Rs 18 crore for 2012-13 fiscal.

Once the proposal is approved by the CCEA, the Empowered Group of Ministers (EGoM) on disinvestment would decide on the floor price for stake sale in the two companies.

Further, the disinvestment department has also sought CCEA approval for allotting shares to employees of the companies at 5% discount to the last cut-off price in the OFS.

The government uses the OFS route, popularly known as auction method, to divest its stake in PSUs and to make firms compliant with minimum public holding.

The government targets to raise Rs 40,000 crore by way of disinvestment in the current fiscal. So far, it has raised Rs 828 crore through stake sale in MMTC and Hindustan Copper.