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With the Sensex crossing the psychological 18,000 point mark, the Government has announced a big ticket disinvestment programme.
The Cabinet Committee on Economic Affairs (CCEA) has approved offloading Government’s stake in four public sector undertakings, aimed at raising at least Rs 10,000 crore.
However, opposition from key ally DMK forced the CCEA to defer the proposal for disinvesting in Neyveli Lignite. This was third attempt to divest the Government’s equity in this Tamil Nadu-based miner. Even trade unions opposed the divestment.
Meanwhile, the approved companies include Hindustan Copper, National Aluminum (Nalco), Oil India and MMTC. The Government expects to get Rs 10,000 crore through selling shares in these companies. Divestment in Hindustan Copper and MMTC will also help in fulfilling the 10 per cent minimum public shareholding norm of SEBI.
CCEA has prescribed divestment through ‘offer for sale of shares through stock exchanges’ for all the four companies. However, it has not given any time line. It has simply been said that market conditions will decide the timing and final amount to be collected.
The Government aims to mobilise Rs 30,000 crore through disinvestment in current fiscal. However, even after five months of the current fiscal, it is yet to open its account on this front.
The Government earlier did announce the date for Rashtriye Ispat Nigam Ltd’s (RINL) IPO, but was postponed as market situation was not good. The Government, on July 20, announced disinvestment of steel major SAIL.
Disinvestment in a listed public sector company can either be done by a follow-on public offer (FPO) or the recently introduced offer for sale through stock exchange or auction method. ONGC was the first company where auction method was used for disinvestment.
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