The Congress-led United Progressive Alliance government is pitching for disinvestment head-and-nail, but the Standing Conference of Public Enterprises (SCOPE) says the government should go slow on paring stake in PSUs. SCOPE chairman Arup Roy Choudhury talks with FE?s Praveen Kumar Singh. Excerpts:
What are SCOPE?s views on disinvestment in PSUs?
We are not opposed to disinvestment in companies. We want the public sector companies to go to the market only through the route of initial public offer (IPO). The government can test the PSUs against the private counterparts through listing. However, my advice to the government is don?t go for large-scale disinvestment, don?t go for concurrent and parallel deals. Don?t throw too many public sector shares in the market at one stroke as that would dilute the value of the shares.
Is this the right time to go for IPO?
Yes and no. Yes, if the government wants to take baby steps towards listing the companies that have already gone far in fulfilling the regulatory requirements. No, if it wants PSUs to jump in the bandwagon just because everyone is talking about it.
Let?s go one at a time and see how the markets react to the initial offers. Even though the markets are cautious one or two pubic sector companies would be received well in the markets. But if one wants to put a flurry of them in the market, everyone will go down. As a professional, my job is to advise the owner what is the right time to sell your shares. It is the owner?s job to decide whether to sell the shares at the right time or the wrong time and at what price.
There is a feeling in certain quarters that disinvestment proceeds can be utilised to bridge the rising fiscal deficit. Do you agree?
It is not the professional solution. The companies should be told where the receipts are going. Can this money be so invested that in return the company also gains, partially if not fully?
What is the position of PSUs on implementation of corporation governance norms?
We have 47 listed PSUs, which have to have the requisite number of independent directors on their boards. Even some of the unlisted PSUs have independent directors on their boards. This shows that PSUs are taking steps towards better corporate governance.
I think that there should not be a fixed percentage of independent directors that a company has to appoint to its board. One has to see the availability of talent for the position of independent director. Putting on board the required number of independent directors just by virtue of law won?t help.
In China, companies have even 10% of directors as independent, but they have a very good corporate governance environment.
Also, when we talk about corporate governance, one has to consider the necessary reporting requirements that PSUs have to fulfill. We report to Parliamentary committees, Comptroller & Auditor General of India, Central Vigilance Commission, etc. Private sector does not do this. That is why you could never have a Satyam in the public sector.
Do you think that the government should lower the control over PSUs?
There is nothing wrong in exercising control over PSUs. The only concern is that the decision to invest or forge a joint venture should be quick. The approval should be time-bound.
It shouldn?t be that the government is sitting on the decision for months or years together. The logic is that no deal is waiting for you in the market. A deal maker is looking for other options all the time. If I don?t go to him, he will move to other bidders.
What is your opinion on giving a level-paying field to PSUs vis-a-vis private firms?
Today we have reverse level-paying field. The government must look at it. We are bearing the social burden of the government. If we start making the recruitment rules according to private sector companies, there will be a huge unemployment in the market.
In such a scenario, the government would have to deal with so many social issues. Does the government realises that? The government has to run the company like this (like National Buildings Construction Corporation Limited) to realise what is happening.