Industry minister Sikander Bakht has given the go ahead for disinvestment in 11 sick public sector units which fall under the administrative control of the department of heavy industries.
These PSUs include Scooters India Ltd, Hindustan Cables Ltd, National Industrial Development Corporation, Bharat Leather Corporation, Hindustan Salts Ltd, Bridge and Roof Company, Tungabhadra Steel Products, Hindustan Paper Corporation Ltd, Praga Tools, Bharat Heavy Plates & Vessels and Bharat Pumps & Compressoors Ltd.
Senior industry ministry sources said the minister gave his nod as he felt these companies were a drain on the exchequer.
There are two clear messages coming from the minister he is in favour of disinvestment and protecting the domestic industry, these sources said.
Bakhts go ahead is significant as there was some apprehension as to whether Bakht would subscribe to the United Front governments agenda for these units, though BJP sources had stated even before the vote of confidence on March 20 that PSU disinvestment was on the governments agenda.
The sale of the 11 sick PSUs was mooted by the former industry minister Murasoli Maran immediately after the UF government came to power. The proposal also had an in-principle clearance from the Cabinet, but the exact quantum to be divested in each of these PSUs will have to ratified by the Cabinet.
Based on the UF governments Cabinet clearance, the department of heavy industries initiated the process of selecting the financial advisors for the disinvestment process. The shortlist of financial advisors include SBI Caps, I-Sec, IDBI, A F Ferguson and Coopers & Lybrand. The finalisation of the merchant bankers was done by February-end in keeping with the time-table finalised by the UF government.
The next development on this front is expected to be the submission of the valuation reports by the financial advisors.
Though the exact percentage of divestment in each of these PSUs will be finalised after the submission of the valuation report, the Cabinet clearance provides for the government retaining a minimum 26 per cent equity in each of these companies. This stems from the governments desire to protect labour interests in the absence of an exit policy. Additionally, minimum government shareholding will guard against asset stripping by the new owners, while providing them the freedom to run the company.
