Difficult to achieve divestment target in FY12: Analysts

The Centre will find it very difficult to achieve its disinvestment target of Rs 40,000 crore in FY12 in the absence of big ticket offerings such as Coal India's last year, said market experts.

The disinvestment target for FY11 (of Rs 40,000 crore) had fallen significantly short in spite of the Coal India and MOIL IPOs.

There is doubt in the street about the fate of FPOs of ONGC, SAIL, IOC and Hindustan Copper in the near future.

A Bloomberg report quoting Mr A.K. Hazarika, Chairman of ONGC, said the promotional tours, scheduled to begin today in the US and some countries in Europe and Asia, would be pushed back. The share sale may start in the later part of next month Mr Hazarika said.

FIIs not enthused

Volatility in Indian stock markets in 2011 has the government on the back foot, said market experts. “There is no charm in FPOs for the retail investor and with share prices of PSUs that are in line for FPOs (ONGC, SAIL and Hindustan Copper) eroding significantly, the government is also playing the waiting game,” said Mr Rajesh Agarwal, Head — Research, Eastern Financiers, a Kolkata-based brokerage.

FIIs are not enthused about the India growth story due to various scams being unearthed, and the inertia with respect to government policies.

“Japan has also done better than India this calendar year in spite of facing a tsunami,” said Dr Nirakar Pradhan ,CIO, Future Generali Life Insurance. The Nikkei yielded 8.55 per cent negative returns in 2011 as against India's -14.64 per cent.

“It is time that the government takes initiatives such as building political consensus, improving response times and the like to bring back investor confidence,” he added.

Experts observe that the Centre finds itself in a tricky situation. “If crude firms up, we can expect the ONGC FPO to be pushed, and if crude comes down then it would be IOC's turn,” said the President of a large financial services firm and an active investment banker to PSU offerings.

The street is waiting for clarity on diesel price deregulation and sees this as an important step to be taken before the ONGC and IOC FPOs are taken up.

There has been no announcement on timelines from the centre on the SAIL and Hindustan Copper FPOs though both these companies have the in principle nod to go ahead.

The fact that these companies are trading well below their 52-week highs are a cause for concern and it will be challenging for the government to go through with these issues in the next couple of quarters, said experts.

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