The governments disinvestment programme for fiscal 2012-13 is likely to begin with the initial public offer of RINL. In an interview with Surabhi,disinvestment secretary Mohammed Haleem Khan outlines the agenda and says that the offer for sale mechanism would be used after modifications and that PSUs would be encouraged buyback of shares from the government. Excerpts:
What is your agenda for FY13?
This fiscal,I would like to push a lot of IPOs as it would help enhance corporate governance. RINL should be the first disinvestment issue this year. All its paperwork is complete,its independent directors are in place and it has converted the face value of shares to Rs 10. The department is making a list of profit-making firms eligible for an IPO.
What is the rationale behind asking PSUs to buy back shares?
Buyback is a measure that over capitalised companies can use. Until now,PSUs had to go to the government for restructuring their capital base. Buying back shares from the government allows them to do that easily. If they repurchase from the market,their minimum public holding may fall below 10 per cent and they may have to delist. Also,PSUs with excess cash are allowed to invest in bank deposits and mutual funds. This would enable cash-rich PSUs to rework their treasury management practices and cash in on market demand. We have written to the Cabinet that it would be the decision of the company concerned.
What do you think went wrong with the ONGC auction?
The biggest problem with the ONGC auction was that Sebi guidelines were not read. Also,everyone thought it would be like a prospectus-based follow-on public offer (FPO). It was actually an improvisation of the so-called off-market deal in the private sector. However,this was not communicated properly.
We are partly to be blamed for this,while Sebi too should have spoken on it before making it operational. The media interpreted it as another FPO. The problem was also compounded by our decision to have more than one platform. We thought it was a big deal and so should be listed on both exchanges. We did not realise that when an investor puts money with a custodian,he has to bifurcate it for both exchanges. Also,since it was a PSU,the problem was over hyped.
Moreover,we faced a lot of problems as we were the first to use the offer for sale (OFS) system. We wanted to catch up with the Rs 40,000 crore target. Otherwise,we could have let some private firm do it and learn from their mistakes.
Have these chinks in the OFS system been fixed now?
We will not abandon the auction as it is very efficient and saves time. But we will carry it out on only one platform,and will not keep bids in hold. Instead,we will probably open the auction around 12 noon and close it by 3:30 pm. That way we can avoid any negative events that scare away the investor. I think we also need to understand the appetite of the larger environment for trying new ideas.
Was LIC roped in to bail out the ONGC issue?
How can LIC agree to invest Rs 12,000 crore based on one phone call? I dont think LIC is so pliable that anyone can call and they will simply write a cheque. If Rs 290 was the floor price,why would it bid at such a high premium of Rs 303 to rescue us? And why will they put bids at different price ranges? I dont know why these questions have not been asked.