Cabinet gives in-principle nod for strategic sale of PSUs

The Union Cabinet today gave in- principle approval to Niti Aayog's proposal for strategic sale in over a dozen public sector undertakings (PSUs) including those that are making profits.
Talking to reporters after the Cabinet meeting, chaired by Prime Minister Narendra Modi, Finance Minister Arun Jaitley said the names of PSUs that are up for strategic stake sale would be made public once they are going to be put up for the auction.
"The recommendations of the NITI Aayog with regard to both disinvestment and strategic sale came up for consideration. In principle the Cabinet has approved the recommendations with regard to some of the units," the minister said.

Each case would be considered separately after it has been examined by the Department of Disinvestment and the ministries concerned, he said.
"So in-principle it has been approved. Specific cases would now come up after a detailed examination as to how it is to be done in each case and the details with regard to the units concerned will be furnished at that stage. This list does not include PSUs for closure," he said.
The strategic sale will involve a management control transfer as the shareholding of the government would come down to below 50 per cent.

"Some of these are important units and therefore since each unit would be considered in its own merit, the timing of that would be decided by the government accordingly," he said.

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Jaitley further said the valuation will also take into account immovable property and other assets.
Asked whether the government will be able to meet the Rs 20,500 crore strategic stake sale target for current fiscal, he said that "at the moment we are at the mid-point of the year and this year we have already made a significant headway".
The government has already raised over Rs 8,000 crore through PSU share buyback and OFS (offer for sale). It intends to raise Rs 36,000 crore in the entire fiscal through minority stake sale in PSUs.
Department of Investment and Public Asset Management (DIPAM) will work out the methodology, price fixation and base price for each of the PSUs up for strategic sale.

"I am not going to allow it to be under sold merely because there is a calendar limitation," Jaitley said when asked about the timeline for sale.
Niti Aayog has prepared a list of public sector units where the government can sell its majority stake to private companies in order to bring in greater efficiency and professionalism in their functioning.
PSUs identified for strategic sale reportedly include profit-making Bharat Earth Movers and Certification Engineers International as well as loss-making Scooters India.
The last strategic sale took place in Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpyaee, when 72 per cent of government stake was sold to Indo Wagon Engineering for Rs 18.18 crore.

Incidentally, the first strategic sale in a PSU also happened under NDA rule in 1999-2000 when the government sold 74 per cent equity in Modern Food Industries to Hindustan Lever for Rs 105.45 crore.
During 1999-2000 and 2003-04, the government had strategically divested stake in 16 PSUs, garnering Rs 6,344.35 crore. These included sale of fuel retailer IBP Ltd to state-owned Indian Oil Corp (IOC) for Rs 1,153.68 crore.
Indian Petrochemicals Corp Ltd (IPCL) was sold to Reliance Industries for Rs 1,490.84 crore, Videsh Sanchar Nigam Ltd to Tata Group firm for Rs 1,439.25 crore and Hindustan Zinc Ltd to Vedanta Group for a total consideration of Rs 768.88 crore.