Divestment makes no headway

Right time to sell stake in profitable companies, say experts

Over three months have passed since the government of Gujarat announced a policy framework for disinvestment and restructuring of the loss-making state government corporations, but except asking a former state finance secretary to form an experts' committee for disinvestment, nothing much has happened during the last 100 days.

The stocks of the government-run enterprises have moved up in this December and in contrast, 22 companies have reported losses.

At the end of the last fiscal year, cumulative losses reported by the 22 government-owned companies crossed Rs 3,000 crore which is expected to go up further by the end of the current fiscal year.

The report of PricewaterhouseCooper on disinvestment of the state government owned companies, prepared during the earlier Keshubhai Patel government, is now gathering dust while the new government keeps buying time for taking a final decisions on the disinvestment procedures.

On Sunday, chief minister, Narendra Modi, told mediapersons that the process of disinvestment has been initiated and work in this target is going on in accordance to the timeframe set by the government.

Minister of state for industries Anil Patel and the state finance minister Vajubhai Vala are the members of the Cabinet sub-committee created for the disinvestment process.

On Monday, the state government announced that former finance secretary and a 1965 batch IAS officer, K V Bhanujan, who is also heading the Gujarat Pollution Control Board (GPCB), will head the experts' committee for this purpose.

But the committee is yet to be formed and there is no indication from the state government on naming the members of this high-profile committee.

"Once the expert committee is formed and it starts functioning, things will move fast. The process of identifying the companies to be divested will be soon initiated. We cannot comment any further on this issue at this juncture," Vala said.

Even the top bureaucrats evade queries on divestment saying as the chief minister himself is heading the Cabinet sub-committee, he is the only person who will be able to talk in detail.

Market experts, however, feel that as the Sensex is rising everyday and they are bullish about the state-owned companies, the government should take a decision on disinvestment soon.

"We expect companies like the Gujarat Mineral Development Corporation (GMDC), Gujarat Industries Power Company Ltd (GIPCL) and Gujarat Narmada Valley Fertilisers Company Ltd (GNFC) to be disinvested in the initial phase as all these companies are doing extremely well and the state can expect a good price at this juncture. After this, the government may opt for divesting loss-making companies like Gujarat State Fertilisers and Chemicals Ltd (GSFC) and Gujarat Alkalies and Chemicals Ltd (GACL)," said a senior broker of the Ahmedabad Stock Exchange.

Brokers expect companies like Gujarat Industrial Development Corporation (GIDC) and Gujarat Maritime Board, which is one of the profit-making enterprise of the state, to be brought under the disinvestment policy of the government.

The PricewaterhouseCooper report has suggested disinvestment of most of these companies.

The Rs 971 crore Vadodara-based GIPCL reported a rise of over 15 per cent in its turnover by the end of the last fiscal year, while turnover and net profit of GMDC were also higher by the end of the last financial year.

Even the Rs 1,050 crore GACL is expected to do better this year, while GNFC, which was affected following a blast a month back in its main plant in Bharuch, is also posting gains.