Sell-off hopes push Punjab PSU stocks

The divestment process is spreading fast from the Centre to States. The Punjab government has decided to solicit bids within the next week o...

The divestment process is spreading fast from the Centre to States. The Punjab government has decided to solicit bids within the next week or two for its stakes in three companies—Punjab Tractors Ltd, Punjab Communications Ltd and Punjab Alkalies & Chemicals Ltd.

“Advertisements calling for bids to privatise (the three companies) will appear in a week or two,” Mukul Joshi, principal secretary, Punjab Department of Industry & Commerce, said while speaking at an HSBC-organised seminar on disinvestment.

When the divestment news hit the market, stocks of the three companies shot up. Punjab Communications soared by 20 per cent to Rs 69.10, Punjab Alkalies spurted by 10 per cent to Rs 14.65 and Punjab Tractors shot up by 16.59 per cent to Rs 163.75 on heavy buying.

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Two companies—Punjab Tractors and Punjab Alkalies and Chemicals—are on the fast-track privatisation list announced by Joshi. The third company mentioned was banking software maker Electronic Systems Punjab Ltd. The State holds 44 per cent stake in Punjab Alkalies & Chemicals, 70 per cent stake in Punjab Communication, 24 per cent stake in Punjab Tractors and 100 per cent in Electronic Systems Punjab.

Punjab Tractors has about a 20 per cent share of India’s tractor market, the world’s largest, and posted a profit of Rs 101 crore on a revenue of Rs 886 crore in the year ended March 2002. As PTL is the second largest tractor maker in the country, other auto majors are expected to show interest in acquiring the government stake.

According to reports, Gujarat will be the next state to go the disinvestment path. This saw a rise in Gujarat state-owned companies too. GSFC soared by 7.63 per cent to Rs 34.55, Gujarat Alkalies by 3.57 per cent to Rs 36.25 and Gujarat Mineral Development Corporation by 3.35 per cent to Rs 121.95). TN Newsprint, a Tamil Nadu government-owned company, moved up by 1.53 per cent to Rs 49.75.

Decision on PSU IPOs soon: A final decision on the issue of floating a public offering for PSUs prior to stragtegic sale of government stake will be taken in the next 7-10 days, Union disinvestment secretary Pradip Baijal said.

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“There are different views within the government on the public offering prior to their sale and we are examining the issue,” Baijal said while addressing the seminar.

Recently, Union Petroleum Minister Ram Naik had stated that public sector companies, including HPCL and BPCL, were slated for strategic sale and a public offering would help make the capital base stronger to fetch a better price for the oil majors.

On the strategic sale in Nalco Ltd and timing for its IPO, Baijal said “we want maximum value for government stake and make a domestic offering as well as issue American Depository Receipts close to disinvestment—before the strategic sale.”

The current pace of disinvestment was very slow with just one per cent of PSU stock being sold in the market, he said, adding the market capitalisation was close to Rs 96,000 crore and has a potential to grow over Rs 4 lakh crore in short span.