Govt okays 10% stake sale in EIL

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SummaryDivestment to fetch R800 cr to exchequer: Chidambaram.

The government on Thursday approved a proposal to sell 10% of its stake in engineering consultancy firm Engineers India to mobilise around R800 crore as disinvestment receipt. The government currently holds 80.4% stake in the company.

“We expect to get around R800 crore at current prices,” finance minister P Chidambaram told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA). In 2010, the government had divested 10% stake through an follow-on offer in the company, a leader in engineering consultancy.

EIL scrip was trading at R229.80 on the BSE, down 3.73% from its previous close. For the July-September quarter of the current fiscal, EIL reported net profit of R161.24 crore, up 10% over the same period in 2011-12. The government has budgeted to raise R30,000 crore by way of disinvestment in 2012-13. The stake sale in EIL is unlikely in the current fiscal.

So far this fiscal, the government has been able to realise just over R6,900 crore through stake sale in PSUs. Further stake sales in Oil India and NTPC are lined up for January and February.

Meanwhile, the Cabinet deferred a proposal for the revival of sick PSU, Scooters India (SIL) “The Cabinet has deferred the proposal for revival of SIL due to absence of heavy industries and public enterprises minister Praful Patel in the meeting," a minister said after the Cabinet meeting.

After the government shelved plan to sell its entire stake in SIL, the department had proposed a revival package of more than R200 crore for revival of the company.

SIL's revival plan includes both cash and non-cash assistance by the government. While cash assistance implies equity infusion, grants and loans, non-cash assistance includes waiving interest, government loan and conversion of loan into equity.

The Cabinet, in 2011, had approved divesting the government's entire 95.38% stake in the ailing PSU to a private player through strategic route (outright sale). But the heavy industry ministry had put on hold the strategic sale of SIL due to political reasons.

The automobile company, which has about 1,200 regular employees, has been incurring losses since 2002-03. In March 2009, the company was declared sick.

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