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Journalism of Courage
Finally kicking off the disinvestment line-up for the fiscal, the government is set to divest 5 per cent stake in state-owned SAIL on Friday.
“The offer shall … commence on December 5, 2014, at 9:15 am and shall close on the same date at 3:30 pm,” said the state-owned steel firm in a filing to the stock exchanges on Wednesday. At current market prices, the stake sale is likely to raise over Rs 1,700 crore.
While this is just a small chunk of the Rs 43,425 crore that the Centre has Budgeted from disinvestment proceeds in 2014-15, it is significant as it is the first stake sale this fiscal.
“This is a start. Market conditions are good and over the next two months, we will have a host of stake sales. Disinvestment in ONGC as well as CIL is likely to take place early in the new year,” said a senior official.
The disinvestment in the steel PSU will be conducted through the offer-for-sale or auction route with sale of up to 20.65 crore equity shares.
The exact floor price for the stake sale is likely to be announced on Thursday after market hours. For retail investors a 10 per cent quota is also likely to be included.
The Cabinet had, in July 2012, approved a 10.82 per cent stake sale in SAIL. The first tranche of disinvestment of 5.82 per cent was completed in March 2013. On Wednesday, shares of SAIL lost 4.67 per cent on the BSE to close the day at Rs 85.65 apiece.
The Centre plans to divest its holdings in over half a dozen firms this fiscal including a 5 per cent stake sale in ONGC, 10 per cent in Coal India Ltd, 11.36 per cent in NHPC Ltd as well as list firms including RINL and Hindustan Aeronautics Ltd.
Until now, the government has been deferring the commencement of the stake sale plan due to various reasons including lack of required number of independent directors as well as opposition from trade unions.
But proceeds from disinvestment are crucial to bridge the fiscal deficit that is targetted at 4.1 per cent in 2014-15. Indirect tax revenue is already under a cloud due to continued slowdown in the economy and the finance ministry has already imposed spending cuts including a 10 per cent cut in non-plan expenditure.
While there will be savings on the oil subsidy due to softening global crude oil prices, the fiscal deficit has already touched 89.6 per cent of the Budget estimate by October this year, raising concerns over the Centre’s financial health.
