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New disinvestment strategy: Govt to focus on smaller PSUs in FY16

Approvals are also in place for initial public offers in Hindustan Aeronautics Ltd and RINL.

Written by Surabhi | New Delhi |
January 28, 2015 2:15:24 am

The government is set to revamp its strategy for disinvestment in public sector units, putting more focus on stake sales in small units rather than in a few big ticket firms.

As part of the strategy, which will be used for disinvestment in the two months of this fiscal and more dominantly from 2015-16, the finance ministry is already working on a list of nearly 12 PSUs including Dredging Corporation of India Ltd, NMDC Ltd, Nalco Ltd and MOIL Ltd.

“For the past few years, the focus has only been on selling government stake in two or three big PSUs, with the expectation that it would help raise most, if not all, of the targetted proceeds from disinvestment. However, all issues have not sailed through, leading to a loss to the Exchequer,” said a finance ministry official, adding that the objective now is to not depend on such a strategy.

The government’s switch in strategy comes after a poor show in PSU stake sales this fiscal after its two big ticket disinvestment plans in Coal India and ONGC failed to materialise. Of the Rs 43,000 crore target, the Centre has till now just raised Rs 1,700 crore from a 5 per cent stake sale in Steel Authority of India Ltd.

Accordingly, the department of disinvestment is lining up stake sales of 5 per cent to 10 per cent in a number of small PSUs, including a 5 per cent disinvestment in DCIL, 10 per cent disinvestment in Nalco, 5 per cent disinvestment in BHEL Ltd, 10 per cent disinvestment in Indian Oil Corporation Ltd and a 10 per cent disinvestment in NMDC Ltd.

The department is also working on sale of 10 per cent government equity in SJVN Ltd and MOIL Ltd along with disinvestment in NHPC, Power Finance Corp, Rural Electrification Corp. Approvals are also in place for initial public offers in Hindustan Aeronautics Ltd and RINL.

“For some of these proposed disinvestments, the Cabinet approval is already in place but we are also floating Cabinet notes for approval in four more PSUs,” said the official, while stressing that the government would also continue to sell stake in blue chip PSUs. The proposed disinvestments in both CIL as well as ONGC would be taken up soon, the official added.

To meet a part of its sell-off target of over Rs 40,000 crore this fiscal, the Centre is also planning to sell stake in some of these PSUs over the next two months with a 5 per cent stake sale in PFC expected over the next few days.

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