The Cabinet Committee on Economic Affairs is expected to take up on Thursday the issue of disinvestment in Power Grid Corp, a Navratna category Central public sector undertaking.

Rs 1 lakh-crore biz plan

A total of 17 per cent equity is to be sold in the second follow-on public offer (FPO), which will include fresh issue of shares equivalent to 13 per cent of the total paid-up capital of the company and 4 per cent of Government holding. Currently, the Government holds 69.42 per cent in the company.

On Wednesday, the power transmitter’s share closed at Rs 96.25, a gain of about 1 per cent, on the BSE.

While the money generated by selling the Government’s equity will go to the exchequer, the amount raised through fresh issuance of shares will go to the company. The amount is to be used for Power Grid’s business plan of roughly Rs 1-lakh crore during the 12th Plan period.

“This will require equity of Rs 30,000 crore. Of this, around Rs 22,000 crore will come through internal accruals, while the company has Rs 750 crore unspent from its first follow-on offer. Still, there will be a gap of Rs 7,250 crore, which can be met through the amount collected in the latest FPO,” a senior Government official said.

He said 2.40 per cent (1.89 crore shares) of the total issue size will be reserved for the company’s employees. Once CCEA gives its approval, the Empowered Group of Ministers on Disinvestment will take a call on the timing, price band and discount for retail investors (those who can bid for up to Rs 2 lakh). Although he refused to give a time frame for the FPO, he said the process would start ‘very soon’ after the CCEA clearance.

The Government has set a target of mopping up Rs 40,000 crore from the sale of its stake in CPSUs, and Rs 14,000 crore from the sale of residual stake in non-Government companies. Till date, it has managed to get a little over Rs 1,325 crore from the sale of its stakes in six companies — MMTC, Neyveli Lignite, Hindustan Copper, National Fertilizers Ltd, ITDC and STC.

Barring Neyveli Lignite, disinvestment in all the companies was conducted through the auction route. In the case of Neyveli, the institutional placement programme route was adopted. Although, the Government has approved IPOs in two companies, RINL and Hindustan Aeronautics, these are yet to take place.