PSUs borrowing to buy equity of another firm defeats purpose: CAG

Due to poor financial condition, it said, ChPT had to raise a loan of Rs 1,775 crore at a rate of interest of 8 per cent per annum for purchasing the GoI's stake in KPL

Criticising the practice of borrowing funds by a PSU to purchase equity stake in another PSU, government auditor Comptroller and Auditor General (CAG) said it defeats “the spirit of disinvestment.” The CAG made this observation while commenting on the disinvestment of Kamarajar Port Limited (KPL) which was sold to Chennai Port Trust (ChPT).
 
As part of strategic disinvestment, Government of India (GoI) sold (March 2020) its entire 66.67 per cent equity in Kamarajar Port Limited (KPL) to Chennai Port Trust (ChPT) for Rs 2,383 crore, General Purpose Financial Audit Report on CPSEs presented in Parliament said.
 
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