Forget the fall, govt may overshoot disinvestment target

If successful, it would be a major achievement, as the government is virtually being forced to fix floor prices for the ongoing public issues lower by about 30 per cent or more from the peak closing prices in January when the BSE index had touched 6194.

While the sensitive equity index has fallen by less than 10 per cent from the peak in January, prices of the shares in six companies where the government is selling equity through public offer has come down by more than 20 per cent, except for Dredging Corporation.

This sharp drop in the share prices led to fixing of floor prices lower by about 30 per cent from the January peak, but ministry sources exude confidence that ongoing issues will help mobilise upto Rs 14,000 crore.

The confidence stems from their estimation that sale of 10 per cent equity in ONGC alone would help garner about Rs. 10,000 crore even if sold at Rs 680-690 a share which is still a significant drop from the January peak price of Rs 994 for the ONGC scrip.

From the sale of 10 per cent equity in GAIL, whose public issue was oversubscribed 1.63 times on the very second day with five more days to go, the government expects to mop up Rs 1,700 crore to Rs 2,000 crore. The government has fixed a floor price of Rs 185 for the sale of about 8.5 crore share through public offer, against the peak price of Rs 297. This reflects drop of over 37 per cent.

Announcing the selling price for IPCL at Rs 170 a share to mop up Rs 1,200 crore, Disinvestment Minister Arun Shourie exuded confidence that the government would be able to meet the revised disinvestment target set for the current fiscal by Finance Minister Jaswant Singh in the budget.

The allottees would benefit substantially as the IPCL scrip, which peaked to Rs 236, is still being traded at around Rs 188.

The remainder of about Rs 800 crore is expected to be mopped up from IBP (over Rs 350 crore), whose offer was oversubscribed 1.7 per cent, CMC where issue for sale of 39.76 lakh shares was oversubscribed by 10.4 times, and Dredging Corporation.