Search the Internet          Tips  Sites: Finance, Investment

Divestment train hits slow track

Gaurav Raghuvanshi

The process of divestment seems to have slowed down, to some extent, after the big-ticket sale of Maruti Udyog Ltd and Indian Petrochemicals Corpora-tion Ltd last month.

Divestment of the Shipping Corporation of India, National Fertiliser Ltd and National Aluminium Ltd (Nalco), which was to be completed by June, would now spill over into September and a decision on petroleum marketing companies Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd continues to hold their divestment.

"The target of Rs 120 billion from divestment in the current fiscal is still very much feasible, but we would not reach the figure in the first half of the year as we had thought earlier," a government official said.

The government decision to seek security clearance of the companies that had conducted due diligence in SCI has meant that the final price bids would now be called only by late August and the company's sell-off may spill into September, according to the official.

The ministry was confident of completing the sale of 51 per cent equity in SCI by June.

In case of NFL, the government is waiting for the new fertiliser pricing policy before inviting bids for the 51 per cent government equity in the company. The sell-off is behind the schedule by at least two months.

The government had earlier targeted to call the price bids in May. The appointment of advisors had been holding up the divestment in Nalco. With the recent appointment of advisors and co-book runner for offloading 30 per cent stake in the aluminium maker through an ADR issue (20 per cent) followed by a domestic public issue (10 per cent), the process is expected to gather steam.

In the final stage, the government would offload another 29 per cent equity in favour of a strategic partner, bringing down its equity in the company from 87.15 per cent to 26 per cent.

Divestment of the third tranche of the India Tourism Development Corporation hotels has been pushed back by at least six months.

The ministry is forced to go slow on the sale of these hotels as it needs concurrence from the state governments, which is proving to be an impediment.

Powered by

ALSO READ:
The Divestment Development
The Rediff Budget Special
The Rediff-Business Standard Special
Money