The Union Cabinet chaired by Prime Minister Narendra Modi on Thursday gave in-principle approval to Niti Aayog’s proposal for strategic sale in public sector undertakings (PSUs). However, names of the PSUs that will go through strategic sale would be announced in due course as and when they are ready for the auction.
“The recommendations of the NITI Aayog with regard to both disinvestment and strategic sale came up for consideration. In principle the Cabinet has approved the recommendations with regard to some of the units,” finance minister Arun Jaitley said while briefing on the Cabinet decisions, as per a PTI report.
The government will sell a substantial portion of its holding in these companies along with giving up the management control. “So in-principle it has been approved. Specific cases would now come up after a detailed examination as to how it is to be done in each case and the details with regard to the units concerned will be furnished at that stage. This list does not include PSUs for closure,” he said.
Each case of sale in a company would be considered separately after it has been examined by the Department of Disinvestment and the ministries concerned. “Some of these are important units and therefore since each unit would be considered in its own merit, the timing of that would be decided by the government accordingly,” he said.
The government will take into account valuation of immovable properties and other assets of the companies while arriving at the sale value. Last month, the government approved the first strategic divestment of Allahabad-based Bharat Pumps and Compressors Ltd. The company had been incurring losses for several years now. According to the financial statement of the company, it incurred a loss of Rs 5.24 crore in the fiscal ended March 2014. The loss in the year 2012-13 stood at Rs 27.9 crore.
In the Union Budget for 2016-17, the government has projected to raise Rs 20,500 crore from strategic stake sales and another Rs 36,000-crore from minority stake sales in various companies. Asked whether the government will be able to meet the strategic stake sale target, Jaitley said that “at the moment we are at the mid-point of the year and this year we have already made a significant headway”.
Niti Aayog has prepared a list of public sector units where the government can sell its majority stake to private companies in order to bring in greater efficiency and professionalism in their functioning.
The last strategic sale took place in Jessop and Co in 2003-04 under the National Democratic Alliance government, when 72 per cent of government stake was sold to Indo Wagon Engineering for Rs 18.18 crore, as per data available with the Department of Investment and Public Asset Management. In the same year, the government had sold 18.92 per cent of its equity in Hindustan Zinc Ltd to Sterlite Opportunities & Venture Ltd for Rs 323.88 crore.