The government has lined up sick public-sector companies such as Scooters India for sale, while continuing minority stake sale in profitable ones such as NMDC, as it aims to front-load the share sale programme in FY16 to achieve the disinvestment target of Rs 69,500 crore.
Having missed the PSU stake sale targets for the five years to FY15-end, the government is determined to avert a repeat of such failures.
Other sick companies to be sold off include Tyre Corporation of India, HMT Bearings, HMT and Richardson & Cruddas, sources said. Besides, the government will also identify profit-making companies for full exit, as stated by finance minister Arun Jaitley in a post-Budget interaction.
He almost halved the disinvestment revenue for FY15 to Rs 31,350 crore in the revised estimate presented in Parliament on Saturday.
Of the projected disinvestment revenue for FY16, a large part of Rs 41,000 crore is expected from minority stake sale in state-run companies while Rs 28,500 crore will be garnered from strategic sale, which could comprise sale of the government’s residual stakes held through SUUTI in private companies namely ITC, Axis Bank and L&T. The stakes in ITC, Axis Bank and L&T could fetch the government Rs 62,738 crore at current prices. Obviously, this alone can fetch the amount estimated in the Budget from disinvestment but given some legal and strategic issues, the government may opt to restrict the sale of SUUTI stakes to what could be mobilised from a close-ended exchange traded fund derived from a portion of these stakes.
Given the additional pressure on central government finances due to higher devolution of resources to states, the finance ministry is keen to sell stake in at least one PSU every month beginning April to avoid delays which derailed the disinvestment programme year after year. “Cabinet notes have already been moved for NMDC and Nalco,” a source said. The government plans to sell 10% each in the two firms in FY16.
Among others, the government plans to sell 5% in engineering major Bharat Heavy Electricals and 10% in Indian Oil Corp. A 5% share sale in Oil and Natural Gas Corporation will proceed after the subsidy sharing issue is resolved. The state-run oil explorer bears a part of losses on state-set fuel prices incurred by oil marketing companies, which has put off investors. “The government should immediately begin share sales next year by evenly spreading out the issues to gain maximum benefit as the stock market is bullish on the new government,” said Manoranjan Sharma, chief economist at Canara Bank.
By Prasanta Sahu