With no equity disinvestment by the government in the first five months of the financial year, a meeting of Finance Minister P Chidambaram with heads of public sector companies next week is seen as crucial for stake sale in the remaining months of 2012-13.
The department of disinvestment (DoD) has set in motion a consultation process for the stake sales. It is scheduled to discuss with merchant bankers this week on the Steel Authority of India Ltd (SAIL) disinvestment. DoD expects the sell-off process to begin from September.
In July, the cabinet had cleared sale of 10.82 per cent of government stake in SAIL, likely to fetch around Rs 4,000 crore. About half a dozen other companies, including Bharat Heavy Electricals, Oil India and NMDC are in the list. After burning its hand in the five per cent stake sale in Oil and Natural Gas Corporation through the auctioning route this March, the government is yet to finalise any single route for disinvestment.
“The options are many. It can be done through book building, auctioning or the exchange traded fund (ETF) mode,” said a senior executive in one of the companies on the list.
The Initial Public Offer of Rashtriya Ispat Nigam Ltd, supposed to kick off the disinvestment process this year, has been postponed twice and a fresh date is still awaited. A sluggish market has made things difficult for the government.
The ETF route would allow the government to pool shares of companies in which it wants to sell stake, to create a fund managed by a Special Purpose Vehicle. The fund would then trade smaller units on the stock exchanges.
The disinvestment target for the previous financial year was Rs 40,000 crore but the government was able to raise only Rs 13,894 crore. To make it more realistic, it was cut to Rs 30,000 crore for this financial year but even this target looks unachievable. However, the minster, in his meetings with senior officials, has made it clear that the target has to be achieved despite the lack of headway till now.