Global Economy

Swift selloff on cards to help Government meet target

NEW DELHI: The government is expected to swiftly proceed with strategic stake sale in at least 10 state-owned companies in which there is “wide interest”, a finance ministry official said, seeking to achieve its target of raising Rs 90,000 crore from disinvestment proceeds in the current financial year.

The government already has approval for selling shares in about 24 companies, including Air India, the national carrier.

“In around a dozen companies, there is wide interest from private players. We are close to fulfilling all the due processes and will invite the final bids,” the official said, adding that some firms may get sold in the July-September quarter itself.

Companies that could be on the block include Scooters India, Bharat Pumps & Compressors, Project & Development India (PDIL), Hindustan Prefab, Hindustan Newsprint, Bridge & Roof Company and Hindustan Fluorocarbons.

Clear Mandate to Expedite Process

The government’s disinvestment plan may get a push after the Bharatiya Janata Party won a clear mandate in the just-concluded general elections. The government had exceeded asset-sale targets of Rs 1 lakh crore in 2017-18 and Rs 80,000 crore in 2018-19.

In February, the Union Cabinet had approved an institutional framework for monetisation of non-core assets of central public sector enterprises under strategic disinvestment. The framework included the setting up of a panel of ministers from the finance ministry, road transport and highways ministry and the respective administrative departments. The panel, known as the alternative mechanism, would decide the timing, price and quantum of shares of a state-run company to be sold.

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“We have already identified such assets for these firms and will be soon initiating this exercise,” said an official with the Department of Investment and Public Asset Management.

On asset monetisation of profit-making state-owned companies, the official said such firms and their administrative ministries can follow the same model prescribed in the framework.

“Niti Aayog can also identify such assets after consultation with the administrative ministry,” he added.

A key merchant banker involved with some of the transactions said a clear mandate for the NDA government should expedite the process. “The problem is that some of these companies may not fetch more than Rs 500 crore and no bureaucrat will want post-closure controversies,” he said, adding that not all companies will get good valuations.

Last year, the government’s attempt to sell a 76% stake in Air India and transfer management control of the airline to private players failed to attract any bids.

“So, one has to factor that as well while taking a call on valuations,” the merchant banker added.

Some experts said the government should remove all entry barriers if a strategic sale is to succeed.

“If it is non-strategic, then let even foreign firms come and bid,” said Prithvi Haldea of Prime Database, adding that the only two requirements for bidders should be that they can demonstrate financial capability and have a well-etched labour plan.


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