Disinvestment of public sector companies is running way behind schedule, fuelling concerns about valuations they can command if the government persists with its ambitious target of Rs 40,000 crore of proceeds from the process for the year. Market analysts unanimously aver that any bunching up of issues in the last quarter of the year, seems inevitable under the current scenario, will spoil the investor appetite and reduce the share valuations of blue-chip public sector companies on the divestment track.
The only PSU issue that has hit the market in the four months to August is SJVN and the government has received less than Rs 1,000 crore from it. Listing of Engineers India Ltd (EIL), which might happen soon, may help the government garner another Rs 1,000 crore. While road shows for EIL are underway, no one in the government can provide a tentative run-up of issues that will be coming to the market for the rest of the year. Nor can anyone chart out a rough timeline for these issues with a reasonable level of certainty.
Disinvestment department officials, who are confident of taking the Hindustan Copper?s follow-on offer to the market in the next few months, are sure that they will be more than lucky if they manage to take Coal India and Sail to the market in the current year.
A major reason for the absence of a robust pipeline of companies ready to hit the market is the lack of much-needed coordination among various government departments to make these companies listing-compliant. To start with, the nodal agency for PSEs, department of public enterprises, does not have any updated data on the number of independent directors that they will have to provide to make the PSUs compliant to corporate governance guidelines issued by Sebi and the government.
In reply to a Right to Information query filed by FE on the number of independent directors needed for PSUs, the department of public sector enterprises said that data is not available with it, as administrative ministries of each of the public enterprises have not provided any information. Another reason for the delay is the dissonant voices raised by the ministers heading various administrative ministries regarding listing of the companies.
The inability of the government to put together a robust pipeline of companies ready to tap the market has triggered speculations about the qualified institutional placement (QIP) route for divestment. While a public issue can take anywhere between five and six months, a QIP can be wound up in less than two months. Despite a section of officials in the finance ministry hard-selling the idea of the QIP route for disinvestment, it does not seem to have found favour with finance minister Pranab Mukherjee so far.
Windfall gains from of 3G bids and money saved from deregulation of petrol prices give the finance minister enough headroom to insist on public issues for divestment. After all, the disinvestment agenda was put forth by the government to give the common man a stake in government companies.