A slew of public offers of unlisted public sector undertakings is likely in the next few years if the recommendations of a government-appointed panel are accepted.
In a report to the Planning Commission, the panel headed by former SAIL chairman S K Roongta suggested at least 30 central PSUs be listed in the next three years, going up to 50 over five years.
The committee wants the government to draw up a year-wise schedule in respect of the listing. However, this may not be workable, as markets need to have an appetite for so many initial public offerings (IPOs).
Jagannadham Thunuguntla, head of research with SMC Global Securities, told Business Standard the question was about IPOs, quality and pricing. “It has to be seen on a case-to-case basis.
If the quality of IPOs hitting the markets is quite good and prices are reasonable, there would be appetite in the market. But if the quality is not good and prices are excessive, then these offerings may not find many takers,” he said. The panel wants the government to identify loss-making CPSEs for divestment.
If the government does not want to privatise such enterprises, the report says, it could consider selling these through an auction to public sector units.
Profit-making CPSEs can buy these firms to create businesses, and leverage the excellent infrastructure at the disposal of many of the enterprises.
The Roongta panel also recommends creating a Public Sector Land Development Authority (PSLDA), on the lines of the Rail Land Development Authority, to develop CPSEs’ surplus land. “PSLDA would identify the excess land and bid them to be developed commercially,” the report said.
, adding that the resources generated can be ploughed back into business development of sick enterprises.
One question that emerges is that why would profit-making CPSEs want to buy enterprises making loses, through the proposed auction, when some of them are protesting against the government’s move to go for a buy-back of shares. Thunguntla said if private sector enterprises are allowed in such bidding, conflict of interest, transparency and other such issues could emerge.
In November 2009, the Cabinet Committee on Economic Affairs had approved listings of all profitable CPSEs. But it gave no time frame. Only a few, including Coal India Ltd and Satluj Jal Vidyut Nigam Ltd, came out with IPOs. Little over 110 of around 250 CPSEs are listed. But many of them are loss-making.
