The Centre has identified 50 new public sector undertakings (PSUs) to be put on the capital markets for selling 10 per cent of government stakes to raise funds for development programmes.
There will be also disinvestment in 10 other PSUs already listed on the stock exchanges to raise the public offer to 10 per cent. The new PSUs to go on the block include BSNL, SAIL, and Coal India.
The past experience of disinvestment through listing on the stock exchanges shows a "win-win" situation for all stakeholders, the government, the public as well as the staff, stressed new Disinvestment Secretary Sunil Mitra in his first 2-hour long interaction with the media here on Friday.
He did not see any political blockade of the disinvestment in West Bengal and Tamil Nadu because of Mamata Bannerjee's Trinamool Congress and the ruling Dravida Munnetra Kazhagam respectively.
He, however, admitted bureaucratic hurdles to be cleared for listing the PSUs as clearances are required to be secured from their administrative ministries. Therefore, he cannot set any time frame for listing all profit-making PSUs on the stock market as decided by the Cabinet Committee on Economic Affairs on November 5.
Many factors have to be taken into consideration before the process is set in motion, he stressed.
"We are in interaction on a large number of these 60 companies with their administrative ministries. We are in interaction with them, but it does not mean that we are close to divesting them... All this is a function of a number of factors," he said.
He said the listing of the PSUs on the capital markets will unlock greater shareholder value and bring greater transparency and equity in operations with higher management accountability. Direct "people ownership" enforces higher levels of public scrutiny and the expectations of investors require management to perform efficiently, Mitra said.
He said availability of good quality PSU shares for trading provides depth and liquidity to market that has a stabilising influence, enabling the public to share prosperity of the government undertakings.
Besides, indirect "people ownership" is also achieved through mutual funds and insurance companies' participation in public offerings.
Mitra said the aggregate performance of large PSUs since after their earlier listing shows impressive growth in sales, assets and dividends aspects that benefit government.
The disinvestment secretary also said that there had been substantial increase in profitability and market capitalisation of the PSUs listed so far, giving an advantage to investors while the government's shareholding in them also increased substantially.
He cited three instances in this case. The first sale of 5.25 per cent of equity in the National Thermal Power Corporation (NTPC) resulted in an inflow of around Rs 2700 crore, while increasing the disinvestment to 10 per cent now is expected to raise more than three times the amount raised them.
The enterprise value of NHPC increased from a pre-IPO value of Rs 18,280 crore to Rs 37,702 crore and that means the value of the government share (94%) shot up to Rs 32,561 crore. The company's remaining 4 per cent shares are to be off-loaded to public to meet the SEBI condition that a listed company must have a minimum 10 per cent shares with the public.
Mitra said the enterprise value of India India nearly tripled from a pre-IPO value of Rs 9844 crore to Rs 27,219 crore.
He said his department is right now starting inter-ministerial consultations for the PSUs' disinvestment. He, however, stressed that the yardsticks for listing them on stock exchanges will vary from PSU to PSU as each has different capital structures, financial strength and differing status in compliance with mandatory listing requirements.