The Government has approved a proposal to revive Specified Undertakings of Unit Trust of India (SUUTI). A move that will help dilute Government stakes in three companies Axis Bank, Larsen & Toubro and ITC.

“The Cabinet has decided to defer its earlier decision of winding up SUUTI,” Information and Broadcasting Minister Manish Tiwari told reporters after the Cabinet meeting on Thursday.

In March 2012, the Cabinet decided to wind up this institution and transfer its assets to an Asset Management Company.

Among the assets, key was shares of these three companies. Once SUUTI was wound up, the Asset Management Company is to leverage these shares to raise resources from banks and financial institutions.

Now, after the revival of SUUTI, the Government may sell (partly or wholly) its holding in any of these companies. Reports are that first on the block will be Axis Bank.

The Government currently holds 11.54 per cent in ITC, 20.72 per cent in Axis Bank and 8.3 per cent in L&T.

A senior Finance Ministry official indicated that Axis Bank shares could be sold first. If 11 or 12 per cent of shares in Axis Bank are sold, it could fetch up to Rs 6,000 crore.

This will help the Government in mopping up much needed revenue from disinvestment proceeds as it has received only around Rs 3,000 crore from selling its stake in Central Public Sector Undertakings against the target of Rs 40,000 crore.

However, it is yet to open account for residual stake sale where the target is Rs 14,000 crore. Proceeds from share sale of Axis Bank will be accounted under residual stake sale.

shishir.s@thehindu.co.in

Related Topics
comment COMMENT NOW