Monday, December 29, 2014

Year 2014: 5 events that shaped PSUs

WITH hardly a couple of days to go in the year 2014, here is a quick look at the five events in the PSU sector this year. From SAIL's mega disinvestment to Coal India throwing life jackets to revive dying companies, those events have significantly shaped the nature of the public sector undertakings in 2014. Here are the 5 events in PSU corridors:

Mega Disinvestment: SAILing Through
The biggest news of the year in public sector was undoubtedly the five percent stake sale in Steel Authority of India (SAIL) by the government that received an encouraging response from investors. The Rs 1,700-crore offer for sale (OFS) was subscribed more than two times, while the portion reserved for retail investors — investing up to Rs 2 lakh crore — was subscribed nearly three times.
The success of the SAIL offering is likely to boost the confidence of the government, which has set a record Rs 58,425-crore gross disinvestment target for this financial year to help bridge its fiscal deficit.  Life Insurance Corporation of India invested as much as Rs 700 crore, about 40 per cent of the issue. Other prominent investors included State Bank of India (Rs 150-200 crore), United India Insurance (Rs 15 crore) and ICICI Bank (Rs 100 crore). The issue also saw participation from Hong Kong-based fund Segantil Capital Management ($15 million) and New-York based Geosphere Capital Management ($5 million).

Coal India's Life Jacket
Coal India Ltd (CIL) on December 23 said it is embarking upon two joint-ventures to revive the Talcher coalfield in Odisha. The first joint-venture will be formed between CIL and GAIL, both state-run companies for coal gasification project and the second joint venture will be with Rashtriya Chemicals and Fertilizers Ltd,, another state-run company.

End of an Iconic HMT Watch 
An important decision that the Modi Sarkar took was shutting down of six sick PSUs. A Cabinet note proposing the closure of six firms under the department of heavy industry has been circulated. The list includes Hindustan Photo Films, HMT Bearings, HMT Chinar Watches, Tungbhadra Steel, Hindustan Cable and the iconic HMT Watches. There was a time when wedding gifts used to be HMT watches. In the second round, 15 more loss-making firms could face a lock-up. Those include British India Corporation, IDPL and their subsidiaries.

OVL's New Zealand Trip
OVL, the overseas arm of state-owned oil and gas explorer ONGC, has for the first time taken interest in New Zealand's oil and gas exploration, a media report said on December 9.
New Zealand awarded 15 oil and gas exploration licences, with US giant Chevron and India's OVL joining the hunt in the South Pacific country.
New Zealand energy and resources minister Simon Bridges said it was the most successful round of block offers since the new system for awarding oil and gas exploration territory was instituted in 2012. Representatives of the company and Indian High Commissioner to New Zealand, Ravi Thakur, were present at the ceremony at the Beehive where the permits were awarded.

Banking on Stake Sale
A day after State Bank of India chairman Arundhati Bhattacharya's statement on December 11 that the Cabinet’s decision to pare stake in state-owned banks will lead to a fresh round of banking reforms, and force these financial institutions to be more competitive, ratings agency Fitch on December 12 said the government's plans to reduce stakes in state-owned banks to 52 percent by 2019 will enable these entities to exercise greater flexibility in raising capital in the equity market.
Bhattacharya had said the government should allow public sector banks (PSBs) to look at different alternatives to raise funds to meet Basel-III norms, including issuing shares with differential voting rights. “The news that the government has allowed PSBs to bring down govt stake to 52 per cent kicks off the next round of reforms because for the first time there is a very clear signal that banks can pick up funds from the market,” Bhattacharya said at the concluding day of the Delhi Economics Conclave.

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