A mere 10 per cent stake sale in top 10 PSUs will help it raise over Rs 37,000 crore.
Besides coming back to power in the recent elections, the Congress-led United Progressive Alliance (UPA) government has more reasons to smile. In ten trading sessions on stock exchanges after the election results were declared, the government became richer by Rs 3,66,131 crore.
The government has a stake in 66 listed public sector undertakings (PSU)s. Out of these, it owns over 80 per cent stake in 26. The combined value of these stakes has appreciated from Rs 8,81,160 crore to Rs 12,47,291 crore.
The reason: Market players expect that a stable government, which does not need support from the Left, is likely to take some bold decisions. One of these is disinvestment of PSUs and reforms in the insurance sector.
On the basis of the current market capitialisation, the government could raise around Rs 37,368 crore by selling just 10 per cent in top ten PSUs in which it owns over 90 per cent.
The government owns many of these companies almost entirely. For instance, it has 99.59 per cent in Hindustan Copper, 99.33 per cent in MMTC, 98.38 in NMDC and 98.88 per cent in HMT.
| UP AND AWAY | ||||
| Govt stake (%) | Price in Rs 29-May | % change* | Amount Rs cr# | |
| Hindustan Copper | 99.59 | 235.80 | 37.05 | 2182.00 |
| MMTC | 99.33 | 27567.80 | 64.17 | 13784.00 |
| HMT | 98.88 | 76.05 | 72.84 | 578.00 |
| NMDC | 98.38 | 449.10 | 104.51 | 17805.00 |
| FACT | 98.11 | 43.50 | 64.46 | 154.00 |
| National Fertilisers | 97.64 | 69.50 | 63.15 | 341.00 |
| Scooters India | 95.38 | 22.80 | 53.02 | 10.00 |
| Andrew Yule & Co | 94.42 | 59.40 | 102.39 | 176.00 |
| Neyveli Lignite | 93.56 | 139.35 | 51.30 | 2338.00 |
| ITI | 92.98 | 43.70 | 78.00 | 126.00 |
| *Change over May 15, 2009, #Amount that can be raised by govt if it disinvests 10% stake. Amount is calculated on market capital as on May 29 | ||||
The Confederation of Indian Industry (CII) has suggested in its 100-day action plan that disinvestment can help the government raise Rs 30,000 crore.
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Stock market experts expect at least some of this wealth to be mopped up. Amitabh Chakraborty, head (equities), Religare Securities, said, “We expect the government to raise Rs 50,000 crore through the disinvestment route. Also, there will be listing of PSUs like NHPC and Oil India, which have already filed their prospectuses with the Securities and Exchange Board of India.” Besides these, BSNL has been valued at Rs 100,000 crore. Offloading 10 per cent stake in the telecom company will fetch the government Rs 10,000 crore.
In the last five years, the UPA government could mobilise just about Rs 8,000 crore through selling stakes in PSUs. The BJP-led National Democratic Alliance, which was in power before UPA, had raised ten times more — around Rs 85,000 crore.
Since the announcement of the election results, the combined market capitalisation of 66 PSU stocks has appreciated by Rs 4,45,253 crore, from Rs 11,20,818 crore (May 15) to Rs 15,66,071 crore (May 29).
The Bombay Stock Exchange PSU index has been the second-largest gainer in the last ten trading sessions. It has appreciated 40 per cent, double than the benchmark Sensex.
The total market capitalisation of the BSE has risen Rs 10,58,872 crore during the period. Interestingly, 42 per cent of this rise has come from gains in 66 PSUs companies and banks.
NMDC’s market capitalisation has increased by a whopping 105 per cent, followed by MMTC and ONGC at 64 per cent and 45 per cent, respectively.