The government will sell part of its residual stake in Vedanta-controlled Hindustan Zinc (HZL) in the current fiscal, department of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey told FE. Besides, he said, an expression of interest (EoI) will be invited for strategic sales of Container Corporation (ConCor) and two former Air India arms – Air Transport Services and Air India Engineering Services by November-December.
“The timing and tranche of HZL stake sale will be decided in consultation with advisers and after gauging the feedback to be received in road shows,” Pandey said. The domestic and global road shows for HZL residual stake sale – through offer for sale (OFS) route – will begin this month.
The government’s residual 29.54% stake in HZL, an integrated miner and producer of non-ferrous metals, including zinc, lead, silver and cadmium is worth about Rs 36,100 crore at current market prices.
The Supreme Court had, in November 2021, cleared the way for sale of government’s residual stake in HZL.
It is believed that the proposed mid-sized strategic sales such as that of IDBI Bank and ConCor will be completed only in FY24, given the processes involved.
A higher stake dilution in HZL will help maximise revenues from disinvestment in FY23. On October 7, the Centre invited EoI for IDBI Bank and offered to sell a total of 60.72% stake in the bank, including 30.48% (Rs 14,400 crore at current prices) held by the government and 30.24% by LIC.
The government may also look at offloading a part of the indirectly-held stakes through the Specified Undertaking of the Unit Trust of India (SUUTI) in ITC and Axis Bank. SUUTI’s 7.91% stake in ITC is worth about Rs 32,380 crore and its 1.55% stake in Axis Bank is worth Rs 3,850 crore at current market prices.
While Dipam is trying to mobilise as much as possible from disinvestment of government equity in many CPSEs and other entities, it is dependent on market appetite and conditions, which are unpredictable.
Since the Narendra Modi government came to power in 2014, it has mobilised about Rs 4 trillion through disinvestments. With the government stake in many large CPSEs, such as Indian Oil and NTPC is at around 51%, there is not much scope to further dilute minority stakes in these firms as it would like to retain a majority stake in some large companies in key sectors as per policy. Strategic disinvestment is also not turning out to be easy given all kinds of obstacles including legal challenges.
“There is many a slip between cup and lip,” Pandey said referring to the withdrawal of the strategic sale process of fuel retailer-cum-refiner BPCL in May due to uncertainties in the petroleum sector. The Centre’s 52.98% stake sale in BPCL could have fetched Rs 40,000-50,000 crore, helping the government to easily exceed FY23 disinvestment target of Rs 65,000 crore. Disinvestment receipts stood at Rs 24,544 crore so far in the current fiscal or 38% of the FY23 target.
The government will come out with EoI for Air India Air Transport Services (AIATSL) and Air India Engineering Services (AIESL), former subsidiaries of now disinvested Air India. There are plenty of potential buyers for AIATSL (ground handling firm) and AIESL (engineering services), Pandey said.
Non-core assets of Air India and its subsidiaries (book value of Rs 14,718 crore as on August 31, 2021) were not a part of the AI disinvestment transaction and were transferred to Air India Asset Holding Company (AIAHL), 100% owned by the Centre.