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The government has initiated the process of divesting its stake in three Central Public Sector Enterprises (CPSEs) — NBCC, Housing and Urban Development Corporation (HUDCO), and North Eastern Electric Power Corporation Ltd (NEEPCO).
It is considering divesting 10 per cent stake each in NBCC and HUDCO, and 25 per cent in NEEPCO. Divestment will be through ‘Offer for Sale’ (OFS) route in NBCC and HUDCO; while there will be an Initial Public Offer (IPO) for NEEPCO.
NBCC and HUDCO are already listed on the stock exchanges. Based on the closing price on the BSE on Tuesday, stake sale in these two companies could fetch over ₹2,400 crore. The government owns 73.75 per cent in NBCC and is considering selling 1.80 crore shares. Post divestment, the government stake will come down to 63.75 per cent. The ‘Navratna’ CPSE is one of the continuously-making profit companies. It has more than ₹80,000 crore book in hand till March. The company has registered consolidated profit of ₹372.14 crore while its consolidated total income surged to ₹709,5.91 crore in 2017-18.
In HUDCO, the Government has 89.81 per cent. After divesting over 20 crore shares, its stake will come down to 79.81 per cent. Still, it would be required to sell around 5 per cent to be compliant with the minimum public shareholding norms as prescribed by the SEBI. The company is engaged in providing loans for housing and urban infrastructure projects. The company earned a net profit of ₹222.52 crore on a revenue of ₹1,169.66 crore at the end of last fiscal.
NEEPCO is 100 per cent owned by the government. The company was incorporated in 1976 to plan, investigate, design, construct, generate, operate and maintain power stations in the North Eastern Region of India. It generates about 40 per cent energy requirement of North-Eastern States with the help of 6 hydro, 3 thermal and 1 solar power stations with a combined installed capacity of 1347 MW. It has 2 power projects under development which include 110 MW Pare HEP and 600 MW Kameng HEP which is scheduled for commissioning this fiscal.
The Government has budgeted ₹80,000 crore to be mobilised through disinvestment. Till date, it has got over ₹9,200 crore through IPOs of Mishra Dhatu Nigam Ltd (MIDHANI) and RITES Ltd and through Exchange Traded Fund (ETF) Bharat 22. Though, the stock market is on a high, the Government is taking all the precaution in disinvestment as stake sale in some CPSEs have not benefitted the investors much. The current market price of a company like New India Assurance Company, despite issuance of bonus shares, is more than 30 per cent below the IPO price.
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