Thursday, May 21, 2015

As many as 25 PSUs to sell shares to the public

THE Narendra Modi-led NDA government has finalised a list of 25 state-owned PSUs that could sell shares to the public for the first time. The move might raise more than a third of India's record divestment target for the fiscal year, reports a leading financial daily.
They include profit-making...
arm of Coal India and ONGC that could help the government get around Rs 25,000 crore in total.
The stake sale may give government finances a big boost. The department of disinvestment has written to the administrative ministries about the plan.
"The idea is to create a pipeline for the next two-three years," a finance ministry official told the daily. This needs to be done as the government is close to the 51 per cent stake level in several listed stateowned companies, the person said. "So, the ideal situation is that we have approvals for stake sale in these firms and we can proceed depending on market conditions."
he unlisted firms may include ONGC Videsh, Southern Coalfields, Bharat Broadband, KIOCL and Mazagon Dock.
"While we can fast track stake sales in already listed firms through the offer for sale (OFS) mechanism, it is essential that all profitable CPSEs (central public sector enterprises) realise their true valuation through listing and further unlock their potential," the official said.
As per the Public Enterprise Survey 2013-14, India has 234 CPSEs, of which 46 are listed.
Some of the profitable ones, including subsidiaries, are South Eastern Coalfields, ONGC Videsh, Bharat Bhari Udyog Nigam, Antrix Corp. and various railway units.
In the case of subsidiaries, the amount raised by the listing will flow into the parent company, which in turn can offer better dividends to the government and increase capital expenditure.
The government recently identified eight hotels run by Indian Tourism Development Corp. for divestment as part of plans for strategic sales in state-owned entities and companies.
The cabinet committee on economic affairs (CCEA) approved a 10 percent stake sale in Indian Oil Corp (IOC), the country's biggest refiner and fuel retailer, and 5 percent in power producer NTPC. At current valuations, the government is expected to generate about Rs 14,000 crore from proposed sales.
"We have approvals for stake sales in a in a list of firms from which we may raise up to Rs 50,000 crore," the finance ministry official noted.
This fiscal, the government has so far raised Rs 1,600 crore from a 5 per cent stake sale in Rural Electrification Corp.
Of the Rs 69,500-crore disinvestment target for this financial year, the government proposes to raise Rs 41,000 crore from stake sales in PSUs and the remainder through strategic disinvestment, including the sale of residual holdings in Hindustan Zinc and Balco.

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