The government will facilitate faster acquisition of raw material from abroad for those central public sector enterprises (CPSEs) with a track record of netting profit for three consecutive years, according to a new policy which the Union Cabinet approved on Thursday. Maharatna and Navratna PSUs will also get more power for overseas buyouts once the new acquisition policy comes into force.
The policy will pave the way for Navratna firms to invest up to Rs 3,000 crore in such assets without government approval, as against the present limit of Rs 1,000 crore, S Sundareshan, secretary to the department of heavy industries and public enterprises, said here. The policy will facilitate easier acquisition of coal, iron ore and other assets abroad.
For Maharatna firms, the limit is Rs 5,000 crore. “The changes will make Indian CPSEs nimble enough to make such acquisitions abroad,” he told reporters after the Cabinet meeting.
Soon, a coordinating committee of secretaries will be formed under the cabinet secretary. It will examine proposals involving investment beyond the prescribed limits for such acquisitions by CPSEs.
Steel Authority of India welcomed the move. Its chairman C S Verma said the 1954-founded company would now make “aggressive forays” for the acquisition of coking coal assets in target countries such as the United States, Australia, Mozambique, Indonesia, Colombia, South Africa, New Zealand and Canada “now that we are armed with more powers and enhanced government support”.
The cabinet also approved a finance ministry proposal to hike the capital base of India Infrastructure Finance Company Ltd (IIFCL) to Rs 5,000 crore for enabling it to lend more to the infrastructure sector funding need which has been pegged at $1 trillion during the next Plan period (2012-17). A provision has also been made to increase it to Rs 8,000 crore, subject to the approval of the finance ministry.
Information and Broadcasting Minister Ambika Soni said such an increase in the authorised capital would enable IIFCL to expand its financial assistance (capability) to infrastructure sector. “It will also help it meet the needs of increased CRAR (capital for risk [weighted] assets ratio), she told reporters after the meeting.
The government has also decided to bring IIFCL under the Reserve Bank’s regulatory oversight to enhance professional capability and increase capital base. IIFCL’s authorised capital currently stands at Rs 2,000 crore.
IIFCL would be registered as an NBFC-IFC (non-banking finance company-infrastructure finance company). The Cabinet has also approved expanding the board of the company to 13 members from seven now.
In November 2005, the Cabinet had approved the formation of a special purpose vehicle for financing infrastructure. It was in 2006 that IIFCL came into being.
The cabinet also approved a Rs 777-crore rehabilitation and restructuring package for Hooghly Dock & Port Engineers Ltd, one of the oldest shipyards of the country. As a part of the package, the government would write off loan and interest amounting to Rs 628.86 crore and Rs 111.08 crore grants-in-aid.
