Govt won't wait for improved mkts for PSU stake sales

The government will move ahead with the stake sale of public sector companies without waiting for further improvement in the stock markets, a senior finance ministry official said.

“If we have to achieve the target of Rs 30,000 crore this financial year, we cannot wait for the market to improve beyond a point. I think the market has bottomed out,” Mohammad Haleem Khan, Secretary in the Department of Disinvestment (DoD)said.

The DoD has already identified a host of state-owned companies for selling stake to achieve the budgeted target of Rs 30,000 crore in the current fiscal. The companies include Hindustan Copper, SAIL, BHEL, RINL and NALCO, among others.

[caption id=“attachment_361916” align=“alignleft” width=“380” caption=“DoD has already started roadshows for a 10 percent initial public offer of Rashtriya Ispat Nigam Ltd. Reuters”]  [/caption]

“If you have to sell in the market, you will have to sell at the price which market is willing to pay,” Khan said, adding there has not been a huge outflow of funds from foreign investors so far in the current fiscal.

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“In this quarter although there is not very big inflow, but at the same time there has not been a very big outflow. So the interpretation suggests that Indian stocks still remain an attractive proposition. So that is a positive sign,” he added.

In June, Foreign Institutional Investors (FIIs) have pulled out funds worth over Rs 230 crore. They had withdrawn Rs 347 crore from the equity market in May, and Rs 1,109 crore in April. The stock markets have declined about 2 percent since April.

Khan said the DoD has already started roadshows for a 10 percent initial public offer (IPO) of Rashtriya Ispat Nigam Ltd (RINL). The stake sale could fetch about Rs 2,500 crore to the exchequer.

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With three months of the fiscal almost over, the DoD would have to kick start the disinvestment programme soon to

garner resources in the remaining months of the fiscal. While RINL is likely to be the first PSU to hit the capital markets in the current fiscal, the others include Oil India and Hindustan Aeronautics.

The DoD Secretary further said the PSUs should get themselves listed with stock exchanges so as to access funds

from the market and realise its true worth. He also said that listing would provide a multi-layered oversight mechanism that would help improve corporate governance.

“The policy is all CPSEs should be listed. Companies which are wholly owned by CPSEs, sooner or later, they will be

listed so that performance is appreciated in the market and if they want to access the market for extra capital, they have

the extra flexibility,” Khan said.

The Central Public Sector Enterprises (CPSEs) operating in sectors like oil, power, coal and steel have profitable

subsidiaries which could be listed on the bourses. Last fiscal, owing to volatile market conditions the government had to postpone its sell off plans and could only divest stake in Power Finance Corporation (PFC), Oil and Natural Gas Corporation (ONGC) and National Buildings Construction Corporation (NBCC).

As against the disinvestment target of Rs 40,000 crore in 2011-12, the government could raise only Rs 14,000 crore

through PSU stake sale.

PTI