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Letter to BS: Strategic sale welcome decision but should have come earlier

It sounds good but perhaps not as easy to achieve

Business Standard 

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Your editorial “The big push, finally” (November 22) makes for an encouraging reading and if indeed all these strategic sale and transfer of control in various is concluded by March 31, 2020, the government would not be too far from the disinvestment target of Rs 1.05 trillion for the current fiscal. It sounds good but perhaps not as easy to achieve. Let’s look at the ground reality.

First, the transfer of stake in the Numaligarh refinery will take a month or two. In all likelihood, due diligence of BPCL by a potential strategic buyer will start only after that. Also, the valuation is likely to be lower than the Rs 59,000 crore by about 8 per cent — perhaps Rs 54,000 crore will come into the government kitty if these valuations are accepted by the buyer. No doubt the negotiators will seek a premium but, some inevitable cobwebs in the company may pull down the price.

Second, whatever is being “sold” to NTPC can hardly be called “disinvestment” and, valuations of those companies are not yet known. Allow me to mention that the estimate of Rs 12,900 crore from Concor and SCI is on the higher side. This too will be a long-drawn affair.

Finally, your advice to not rush through the process to meet the deadline will mean further delay. So, overall, end September 2020 is a more likely date for meeting the target. Having said that, the strategic sale decision is indeed welcome because not many companies would want to buy into a PSU without the government letting go of control.

Krishan Kalra, Gurugram

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First Published: Sun, November 24 2019. 20:40 IST