With a fairly comfortable position on the fiscal side, thanks to 3G auction and impressive tax collection, the finance ministry is planning to fix a modest disinvestment target of Rs 30,000-35,000 crore for the next financial year (2011-12). This is slightly lower than the disinvestment target of Rs 40,000 crore for the current fiscal.
?The target (disnivestment) can be fixed at Rs 30,000-35,000 crore as there are fewer companies for disinvestment for next year and government’s fiscal position is expected to remain strong during the period on the back of a robust growth rate,? a finance ministry official told FE.
“The comfortable position will give us more room to plan disinvestment in a way that government shares fetches maximum returns in the market,” the official added. Apart from good fiscal situation, the government is also weighing the prospect of flooding the market with too many issues next year. As many large issues may not come up in 2011-12, smaller issues needs to be spaced properly to get maximum returns.
Department of disinvestment is planning to offload government stake in over seven to eight public sector companies in the next fiscal. These may include companies such as Rashtriya Ispat Nigam Limited, Bharat Heavy Electricals Limited (Bhel), MMTC limited. In addition, the second tranche of stake sale in Steel Authority of India (SAIL), in which centre will dilute its stake by 5% and company will fresh equity of the same size may also happen in next fiscal. Similarly, the big ticket issue of Indian Oil Corporation is also expected to be taken for the next fiscal year as the government is yet to decide on the under recoveries borne by the oil marketing companies.
While disinvestment department is keeping low due to the international holiday till January 15, it is expected to bring out SAIL issue by January-end once it files Red hearing perspective with Sebi. Government is also planning to bring out three more issues after SAIL. Along with 5% stake sale in ONGC, government is planning to divest 10% stake with issue of equity by the company of the same amount in Hindustan Copper.
In case of Power Finance Corporation, a Cabinet approval is yet to come. The proposal is to disinvest 5% of the Centre?s stake as well as the issue of 15% fresh equity, through the FPO route.