Speaking at the capital markets conference organised by FICCI, Bhatnagar said: “The government is looking at potential strategic stake sales in the non-priority sector.” People in the know said a proposal to divest stake in Air India was in the works and could conclude this year.
Bhatnagar reiterated the government’s stance on ensuring that divestments are done at the right price and time. “Under no circumstance are we going to divest at distressed valuations,” he said. To facilitate the disinvestment drive, sources said an enabling provision is under consideration, through which the government could reduce its stake below 51 per cent-mark and still retail control in the PSU.
The Centre has set itself a target of raising Rs 1.05 trillion by way of disinvestment, in FY20. People in the know said the government was also looking to sell its minority stakes in firms such as Hindustan Zinc. The divestment plans in the company is stuck because of legal issues, sources add.
It is also looking to offload its SUUTI stake in Axis Bank and ITC. The disinvestment plans could involve huge land parcels or non-core assets that PSUs have been holding on to. “These non-core assets may be hived-off into separate entities or divested,” said Bhatnagar.
The people said that in certain cases, monetising of land parcels could get challenging if there was no clarity on land titles. “Some of these land parcels are quite old; clarity on land title may become an issue,” said a person close to the ministry.
People in the know said strategic sales in mining firms could be more long-drawn, as it would involve state governments that have certain ownership over mining regions.
Market participants say weak market conditions have prompted the government to review equity sale plans and consider strategic stake sales.
“We could see lower frequency of divestments through exchange traded funds, as additional supply of these papers in markets could impact share price of PSUs,” said an investment banker.