The sharp downward revision in disinvestment receipts for FY14 in the interim budget to R19,027 crore from R54,000 crore resulted partly from procedural delays that rendered it impossible to sell the government’s residual stakes in Hindustan Zinc (HZL) and Balco this financial year.
Official sources said the request for proposal (RFP) to select the merchant bankers for the stake sales in HZL and Balco were issued only last week. At least four weeks are to be given for RFPs to be submitted. Thereafter, it will take another two weeks for the government to select the bankers given the formal procedures.
Once the bankers are selected, sources said, they may have to do roadshows to build investor interest, which will take not less than three weeks. This means the sale, most likely through the offer-for-sale route, can’t be concluded before mid-April ? the reason why the proceeds, estimated at R15,000-20,000 crore, could not be shown in the FY14 revised budget.
The government holds 26% stake in HZL and 49% in Balco. The cabinet approval for offloading HZL and Balco stakes came only recently, after long-drawn deliberations among the finance, mines and law ministries over whether Parliament approval was required for the sale.
The decision to go ahead with the sale was taken after the PMO intervened and the attorney-general gave a favourable opinion.
The FY14 budgeted disinvestment target from stake sales in PSUs of R40,000 crore was revised sharply downwards to R16,027 crore. Stake sales already completed include those in MMTC, Neyveli Lignite, Hindustan Copper, National Fertilizers, ITDC, STC and Power Grid Corp and Engineers India.
The proceeds from these eight companies amount to R6,027 crore. Pending stake sales for FY14 include ONGC and Oil India together picking up 10% in Indian Oil for R5,000 crore, sale of 5% in BHEL to PSUs to be identified for R2,000 crore, and R3,000 from an exchange-traded fund comprising scrips of 11 PSUs.
The PSU disinvestment target for FY15 is R36,925 crore. Additionally, R15,000 crore have been budgeted to be mobilised through sale of government stakes in private companies (HZL and Balco). For this year, only R3,000 crore is shown in the revised estimate as the amount to be received from sale of government stake in non-government companies.
As the proposed sale of 12% ?SUUTI stake? in Axis Bank, expected to be concluded this year, could fetch the government over R7,200 crore at current market prices, the RE figure of R3,000 crore looks like an under-estimate. Officials were non-committal on whet-her this indicated only a lesser quantum of SUUTI stake will be sold before April.