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Govt to get billions from divestment in these PSUs
Divestment is the government's mantra to earn big bucks at a time when the country is also feeling the ill-effects of the global financial crisis. Now that the Left parties are not a part of the United Progressive Alliance-II, the government has put divestment of public sector units on the fast track.
It plans to raise over Rs 25,000 crore (Rs 250 billion) in 2009-10, which will help to cut down fiscal deficit and the expansion of public sector enterprises.
The government has asked all ministries to compile a list of state-run firms for sale of stake and listing on stock exchanges.
The Economic Survey had suggested the government sell at least 10 per cent in all unlisted profitable state-run entities and auction units that cannot be revived.
There are over 400 public sector undertakings under the administrative control of the central government, out of which nearly 50 are listed on the bourses.
The government plans to dilute its shareholding in blue ship public sector undertaking (PSU) NTPC by 5 per cent and in Satluj Jal Vidyut Nigam (SJVNL) by 10 per cent. Another 5 per cent government stake will be off loaded in Rural Electrification Corporation Limited through public officering in the domestic market.
According to estimates, the three public offers are likely to fetch about Rs 9,000 crore (Rs 90 billion) for the government.
Here's a look at the companies that will bring big bucks to the government's coffers: Click NEXT to read further...
Govt to get billions from divestment in these PSUs
Oil India
The initial public offer of Oil India Ltd got oversubscribed 30.6 times on the final day of closing, with institutional buyers flocking the counter with maximum number of bids.
OIL, a mini-Ratna PSU, expects to raise up to Rs 4,982 crore (Rs 49.82 billion) through the stake sale. This is the second PSU stake sale after NHPC during the second term of the United Progressive Alliance government.
Marketmen said despite the oversubscription of the issue, lack of interest from retail investors is a cause of concern for the primary market. OIL, which produces 3.5 million tonnes of oil annually, will offer fresh equity of 2.64 crore (26.4 million) shares or 11 per cent, while the government will put on offer 10 per cent of its stake in the company to state refiners.
Post-IPO and divestment, the government's stake in the company will decrease to 78.50 per cent from the current 98.13 per cent.
The divestment in NHPC and Oil India have fetched the government around $1.8 billion.
NHPC
The National Hydro Project Corporation (HDPC) IPO received overwhelming response in August 2009. The company offered shares of face value Rs 10 each in the price range of Rs 30 to Rs 36 per share. NHPC is a mini-Ratna dedicated to the planning, development and implementation of an integrated and efficient network of hydroelectric projects in India.
Govt to get billions from divestment in these PSUs
NTPC
The government's holding in NTPC (formerly called National Thermal Power Corporation) will come down to 84.5 per cent from 89.5 per cent after divestment.
Post-divestment, the government said the share price of NTPC will rise, which would help the company raise resources in the international market on competitive terms.
In 2007, NTPC had planned to raise Rs 6,000 crore (Rs 60 billion) from the international market, but it did not materialise due to opposition from Left parties. The government had to give in to their demands and decide not to divest its stake in Navratna companies.
The sale of 5 per cent NTPC equity would mop up about Rs 8,800 crore (Rs 88 billion).
Govt to get billions from divestment in these PSUs
The government is likely to raise around Rs 32,000 crore (Rs 320 billion) from divestment in NMDC (formerly National Mineral Development Corporation) and Steel Authority of India Ltd. Steel minister Virbhadra Singh said the divestment proposals would be placed before the Cabinet by December.
The department of divestment has given an in-principle approval for a 10 per cent public offer in case of SAIL, as well as disinvestment of an equivalent size in two tranches.
The government is of the view that public holding in listed companies should be at least 10 per cent. In tandem with this, the steel ministry has approved the sale of 8.38 per cent government equity in NMDC.
Govt to get billions from divestment in these PSUs
Coal India
Coal India has put forward a plan to divest 15 per cent stake. The 15 per cent disinvestment would see 10 per cent of government equity going into the proposed Initial Public Offering (IPO) of the PSU and the rest 5 per cent would be utilised to offer stocks to employees and those who have lost land for the mines.
Out of the 5 per cent, 3 per cent has been proposed to be given to employees as stock option and two per cent to the land losers, the sources said.
They said the company is discussing the stake sale plan with the department of disinvestment in the finance ministry. The company was likely to initiate mandatory steps like filing the Red Herring prospectus in July-August next year for the proposed IP0.
The Department of Disinvestment had last month sought clarification from the coal ministry on the proposed disinvestment.
Govt to get billions from divestment in these PSUs
Satluj Jal Vidyut Nigam (SJVNL)
The stake sale in SJVN will bring down the Centre's holding from 75 per cent at present to 65 per cent.
The Himachal Pradesh government holds the remaining 25 per cent of equity in the joint venture. SJVN operates a 1,000 mw hydel project at Nathpa-Jhakri in Himachal Pradesh.
Govt to get billions from divestment in these PSUs
Bharat Sanchar Nigam Ltd, MMTC (formerly Minerals and Metals Trading Corporation of India) and Manganese Ore India (MOIL) are next on the divestment list. The government is targeting at divesting these in Q1 of the next fiscal.
The government plans to divest three-four companies every quarter in the next fiscal. Engineers India, National Aluminum, National Fertilizers and Rural Electrification Corporation also top the divestment chart.
Govt to get billions from divestment in these PSUs
Heavy Industries and Public Enterprises Minister Vilasrao Deshmukh said the board of directors of BHEL will have to take the final call on disinvestment.