The Hindu Business Line : `Disinvestments increase liquidity in markets'

The Managing Director of Prime Database, Mr Prithvi Haldea, is happy with the Nalco and Neyveli Lignite divestment announcement because he is of the opinion that listing of PSUs leads to greater liquidity in the markets and also leads to increase in the investor base.

Excerpts from CNBC-TV18's exclusive interview:

How soon do you expect Neyveli Lignite and Naclo sales to go through?

That is a big question mark, because for the last three years, the Government has announced several divestment programs, but the first one happened in February-March, 2004. Since then, we have had only NTPC.

There are a number of announcements made in the last two years for several PSUs, which will be divested. None of them have happened.

So I am very happy that there is at least intent. I would be happier if this materialises as soon as possible, because I have always maintained that PSUs have to get listed. There has to be greater liquidity in the market, we have to increase the investor base.

Would you say that today's announcement is a little more than just a statement of pious intention?

This appears to be more serious. I am presuming that as these two divestments have Cabinet approval, so that there is no opposition to such disinvestments programmes.

We also have power generation in the pipeline, where the Government has announced divestment-cum-fresh capital. That could happen in the next 4-5 months. Then there are issues of Shipping Corporation, etc.

In our list, we have almost 35 companies for which the Government has announced its intention of divestment. The sooner it happens, the better it is for the markets.

What is the price at which the Government could be introducing this 10 per cent stake sale for Nalco as well as Neyveli?

That's a big problem for the Government because it should come out with an IPO when the company is not listed; for example, Power Finance. Then one will not have a problem of an existing price in the marketplace. But when it is an already listed stock like Nalco, we saw all kinds of problems.

In the case of ONGC and GAIL, pricing in FPO is typically very difficult and one has to obviously price it closer to the market price at the time of issue. So, one cannot call on price today.

When the issue is closed for us, the price will have to be at a discount to the current market price of that date. We do not know where the markets would move in next six months and therefore, it is impossible to say at what price will these issues come at.

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