The much-awaited disinvestment of state-run MMTC Ltd, the country’s biggest trading company, in which the government holds more than 90 per cent equity, is expected to take place by February this financial year, even as the government is yet to decide on the amount to be raised and the process to be followed in selling its stake in the company to mop up Rs 40,000 crore and reduce the soaring fiscal deficit and financial social sector projects.
The government currently owns 99.33 per cent in MMTC and is heavily depending on it to raise a significant amount, after tasting initial success the government got by selling stake in SJVN Ltd in the beginning of the financial year.
“Disinvestment of MMTC should happen this financial year,” a senior official from the Department of Disinvestment (DoD) told Business Standard, adding it might follow a similar route as Coal India Ltd, in which the entire proceeds would go directly to the government’s pool.
Such a process of disinvestment is different from what is being followed in the case of Steel Authority of India (SAIL), where the company intends to raise fresh capital and the administrative ministry would approach the Cabinet Committee Of Economic Affairs (CCEA) with the disinvestment proposal.
The official also added the disinvestment department had already had one round of meeting with the Department of Commerce. Another round was expected to take place within the next couple of months when the amount to be raised would be finalised.
Sanjiv Batra, chairman and managing director, MMTC Ltd, had earlier said the disinvestment process could be delayed as the government was yet to appoint five more independent directors, out of which three had been appointed.
The norm is to have 50 per cent independent directors at the time of filing the draft prospectus.
According to DoD’s plan, disinvestment of Engineers India Ltd is likely in June, Coal India and Hindustan Copper in August, SAIL in September, PowerGrid in November, IOC and Manganese Ore India Ltd in December, Rashtriya Ispat Nigam Ltd (RINL) in January 2011, MMTC in February and Shipping Corporation of India Ltd (SCI) in March.
In the Budget for 2010-2011, Finance Minister Pranab Mukherjee proposed to bring down the fiscal deficit to 5.5 per cent of the gross domestic product from 6.7 per cent in 2009-10.
