The Centre is now preparing an action plan for taking forward the public sector disinvestment process over the next two years, Disinvestment Secretary Sunil Mitra said.
The government had recently approved a one-time exemption, permitting full utilisation of the divestment proceeds, which are normally deposited in the National Investment Fund (NIF). Efforts were also on to widen the retail investor base, Mr. Mitra said.
Participating in an interactive session with the members of the Indian Chamber of Commerce here, he said the government hoped to garner at least Rs. 8,000 crore through the proposed follow-on public issue of NTPC, the first such issue next year. “NTPC’s maiden issue in 2004 was made at a price of Rs. 62 a share which was now trading at Rs. 210”, he said adding that the enterprise-value of the PSU increased substantially after listing. Citing an instance, he said Oil India’s enterprise-value had increased manifold with listing.
The divestment process was getting a sizable support from the domestic institutional investors, he said.
Mr. Mitra also informed the gathering that the PSUs had outperformed the private sector companies on the stock market.
He said there were 61 unlisted Central public sector units which could be listed based on their financials till 2007-08.
According to the criteria, positive net worth CPSUs with a three-year profit record and which do not have any accumulated losses will qualify for listing on the exchanges.
The Disinvestment Department was in touch with the adminstrative ministries for their assessment in this matter.
Mr. Mitra dispelled the criticism that disinvestment would lead to ‘creeping privatisation’ saying that since the government would only sell a minority share there was no question of privatisation. Disinvestment was a win-win situation Mr Mitra said in his first interaction with the media since assuming office in August. His assignment in West Bengal, which put a human face to the disinvestment of some state PSUs in West Bengal, had brought him to the forefront.
On the issue pricing, he said that introduction of an auction system instead of the current practice of fixing a price-band was a possibility. “The idea is to set a floor price. We want to widen the retail base,". A cap was also being proposed for institutional investors. This move was also expected to garner higher realisation while offering a discount to retail investors.
Referring to the National Invest Fund (NIF) for parking the proceeds from the CPSU divestment, Mr. Mitra said the government had sought a one-time exemption permitting full utilisation of the divestment proceeds deposited in the NIF. The corpus now stands at Rs. 1,814.45 crore from the divestment of Rural Electrification Corporation and Power Grid Corporation of India Ltd.
Earlier, 75 per cent of the income from the fund was used for investment in social sector projects and the balance was reserved for building a capital base for revivable and profitable PSUs. “This exemption would be in effect from April 2009 to 2012”, he said. Within this fiscal three more CPSUs — Sutlej Jal Vidyut Nigam Ltd, NMDC and REC — would go through divestment.