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Govt plans big-bang divestment
4 Jun 2009, 0049 hrs ISTNEW DELHI: With Left Flag out of sight, the government is planning a big-bang disinvestment in the state-owned PSUs. It plans to raise over Rs
25,000 crore in 2009-10, not only to reduce fiscal deficit but also for expansion of public sector enterprises.
The disinvestment department, which was out of action for some time due to strong opposition from the Left parties against any selloff of government stake in PSUs directly or indirectly, has again come under the limelight. Leading merchant bankers are approaching the department's officials to get business in near future.
A senior merchant banker said the department is ready with a number of proposals of stake sales in the coming months. Draft prospectus of PSUs like Oil India, National Hydro Power, RITES and UTI Asset Management Company have already been cleared by Sebi. As the sentiment in the equity market is much better now, these companies may decide to go ahead with their public issues soon.
A senior government official said when the Sensex was hovering around 6,000 points in 2003-04, the government could raise Rs 15,500 through divestments. With Sensex around 14,500 now, government can think of raising anything upwards of Rs 25,000 crore.
The main chunk of fund, a source said, would come from the divestment of government stakes in blue chip companies like BSNL, MMTC, NMDC, Coal India, NTPC and NALCO. Disinvestment of up to 10% in BSNL alone could fetch around Rs 20,000 crore.
Similarly, the market capitalisations of MMTC and NMDC are at present around Rs 1,60,000 crore and Rs 1,40,000 crore respectively, with government's holdings around 99%. Divestments in these companies can also raise substantial funds, the source added.
According to a Religare report on disinvestment, a government committee had already recommended selloff of stakes in 25 companies. But, because of opposition from Left parties, the government could not proceed. As the scenario has changed now, government is likely to go ahead with disinvestment of its stakes in these companies.
Besides these companies, government had also planned to do strategic sale in many other companies but could not proceed due to opposition from allies. In Bharat Aluminium, the government had sold 51% stake to Sterlite Industries, which is now called Vedanta. As per the original agreement with Vedanta, the government should sale the remaining stake also. As management has been already transferred to the private partner, the government is considering to exit the company.
Govt plans big-bang divestment - India Business - Business - The Times of India