Rich PSUs to bail out divestment by buying stakes of other PSUs
The idea is to use a portion of the cash surplus with PSUs to boost the disinvestment programme, given the market appetite for the stakes being offloaded is relatively small. Sources said that NMDC with its R24,000-crore cash reserve is equipped to assist the government’s disinvestment programme, even after meeting its capex requirements of R15,000 crore for the next three years. In the last couple of years, when market sentiments remained weak, Life Insurance Corporation played a key role in salvaging the disinvestment programme. The latest instance is that of the state-run insurer, along with State Bank of India and other state-owned financial institutions bailing out Hindustan Copper’s (HCL) offer for sale (OFS) issue.
Currently, the cash surplus with PSUs is a little over R1.5 lakh crore. Although these PSUs have lined up investment plans, the government reckons that a portion of the surplus can be made available for PSU disinvestment, given the government’s acute fiscal stress. Sources said that Coal India, with a cash surplus of R65,000 crore, can also be urged to buy PSU stakes.
“Under the cross-holding regulations, we can pick up shares of other state-owned companies subject to approval of the Cabinet,” said an official in the steel ministry, under whose purview NMDC comes.
The Cabinet in March last year had allowed cash-rich PSUs to participate in buyback of shares, but the companies remained hesitant.
The government also announced a cross-holding scheme for PSUs and other state-run entities under which the cash-rich ones like LIC and SBI would buy the government’s holding in other public sector companies. This will allow the government to raise money and still maintain an indirect owner.
“There are some companies that have more surplus cash than their annual turnover. So if they do not have any capital expenditure plans, they can invest this amount in some state-owned blue-chip company,” another government official said.
So far, the government has managed to raise Rs 6,900 from disinvestment this fiscal, against the target of Rs 30,000 crore. The department of disinvestment has lined up a slew of offers — the Oil India stake sale is expected to fetch Rs 2,500 crore and NTPC’s some Rs 12,000 crore. Other offers on the cards are those of MMTC, Nalco, Rashtriya Chemicals and Fertilizers and SAIL.
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