FinMin mulling IPOs in 3 state-owned firms in FY16

The finance ministry, which has set a Budget target of raising Rs 69,500 crore through disinvestment in 2015-16, is trying to revive plans for initial public offerings (IPOs) in three central public sector enterprises (CPSEs) — Hindustan Aeronautics (HAL), Rashtriya Ispat Nigam (RINL) and THDC India.

The proposal to sell a 10 per cent stake in HAL has been discussed for two years, while public debuts of RINL and THDC (each by sale of 10 per cent shares) were considered for 2014-15 as well. None of these plans materialised, for a number of reasons.

Now, officials in the finance ministry’s department of disinvestment (DoD) are again setting the ball rolling for these three proposals, Business Standard has learnt.

PUBLIC OFFERING PLAN

• Finance ministry considering IPOs for HAL, RINL, THDC as part of Rs 69,500-cr stake-sale target
   
• HAL stake sale was originally proposed in FY14; RINL, THDC were part of FY15 disinvestment plan
   
• IPOs of all three were deferred due to various reasons
   
• FinMin officials will meet defence ministry counterparts soon to discuss the HAL IPO
   
• Officials will hold similar meeting with UP finance department for THDC stake sale
   
• RINL, which suffered damages in Cyclone Hudhud, will be taken on board for discussions on IPO

The total proceeds from the three offerings are expected to be around Rs 6,000 crore. Half of that is expected to come from the sale of stake in HAL, while RINL and THDC are expected to bring in the rest.

“Even before the year starts, DoD has prepared a pipeline of minority stake sales worth Rs 30,000 crore (in listed PSUs). These are in various stages of approval. That allows time to put IPOs back on the table,” said a senior government official, adding there, though, were some stumbling blocks.

Sources say the IPO of HAL, a defence behemoth and India’s only manufacturer of military aircraft, has been put on the back burner as the defence ministry is not keen on selling stake in one of its marquee organisations.

Officials from DoD would likely meet their counterparts from South Block soon to hear their concerns, and push for the need to take the company public, the official said, adding the date for such a meeting had not yet been decided. Similarly, sources said there was unwillingness on the part of the Uttar Pradesh government to take THDC public.

The hydroelectric power company, formerly known as Tehri Hydro Development Corporation, is jointly promoted by the Centre and the UP government. They added the department of disinvestment was planning to meet officials from the Uttar Pradesh finance department and discuss the issue. Further details were not revealed.

As for RINL, the Vizag-based steelmaker suffered damages as Cyclone Hudhud hit the country’s east coast in October last year. Parliament was informed the company had suffered damages worth about Rs 350 crore. Government officials later said the company’s proposed IPO would be deferred till the company could recover.

Officials will soon start discussions, with representatives from RINL, to come up with a feasibility plan and road map for a market debut.