The government is likely to withdraw Rs 60 crore from the reserves of Minerals and Metals Trading Corporation (MMTC) and another Rs 40 crore from State Trading Corporation (STC) before it disinvests its stake in the two public sector undertakings (PSUs). The combined reserves of these companies are around Rs 900 crore.
The decision was taken at a recent meeting of senior officials from the commerce and industry ministry, DoD and finance ministry, said official sources.
This development brings to end a tussle between department of disinvestment and the ministry of commerce and industry on the amount to be withdrawn from the reserves of the two PSUs.
While commerce and industry ministry, after receiving a report from SBI Caps, had recommended that the government should withdraw only around Rs 80 crore from the reserves of the two companies, DoD had sought the withdrawal of around Rs 225 crore arguing that there was no point in handing over liquid cash to a strategic partner.
Officials in the commerce and industry ministry had however pointed out that of the total reserves, around Rs 650 crore would be required by the two PSUs to fund voluntary retirement schemes alone. Also, the amount shown as reserves is invested in various instruments and is lying with different organisations. "The cash component of the reserves is much less," an official said.
While the issue of withdrawal of reserves was a major one, divestment in MMTC has also been held up on account of delay in completion of the Nilanchal Ispat Nigam Ltd.
MMTCs equity in the project was raised from Rs 100 crore to Rs 150 crore as two foreign promoters had backed out of the project.
The government proposes to disinvest its entire 99.33 per cent stake in MMTC and 91.03 per cent held in STC.
The matter of withdrawal of reserves will now go to the cabinet committee on disinvestment and the government will also appoint global advisors for divestment.
A decision on taking over the business carried out by the two PSUs is also awaited. Commerce and industry had initially proposed that the activities be taken care of by commodity boards like tea board, rubber board, spices board and coffee board.
In case food grains, trading will be handled by the Food Corporation of India, sources said. They also said that Agricultural Products Export Development Agency will handle some trade activities on behalf of STC.
