Disinvestment back on agenda

As part of the big-ticket reforms package, the government finally unveiled its disinvestment programme for the current fiscal.

The Cabinet Committee on Economic Affairs (CCEA), on Friday, gave the go-ahead to equity stake sale in four PSUs, which is likely to mop up nearly Rs.15,000 crore or about 50 per cent of the Rs.30,000-crore divestment target set for 2012-13.

Offloading stake

As per the CCEA approval at its meeting here, while the four PSUs, namely, Hindustan Copper, Oil India Ltd., MMTC and Nalco, will be on the block for offloading of the Centre’s stake in them, no decision was taken with regard to either the equity dilution proposal in Neyveli Lignite (5 per cent) or the initial public offering (IPO) proposal of RITES to the extent of 10 per cent.

According to official statements on the disinvestment proposals, the Centre is set to offload 10 per cent of its stake in Oil India and 9.59 per cent in Hindustan Copper.

As for Nalco, the equity dilution will be to the extent of 12.15 per cent while in the case of MMTC the stake offloading will be 9.33 per cent through the OFS (offer for sale) route, a mechanism cleared by market regulator SEBI.

At present, the government equity holding in Oil India is 78.43 per cent and the paid-up capital of the company as on March, 2012, is Rs.601 crore. “After this disinvestment, the government's shareholding in the company would come down to 68.43 per cent,” the statement said. Likewise, the Centre’s stake in Hindustan Copper, post-disinvestment, will stand 90 per cent, down from the current 99.59 per cent.

As for Nalco, the Odisha-based aluminium company with an equity capital of Rs.1,289 crore, the government equity stake in the PSU would come down to 75 per cent from 87.15 per cent at present. Similarly, the equity offloading in commodity trading firm MMTC with a paid-up capital of Rs.100 crore will bring down the Centre’s stake to 90 per cent from 99.33 per cent at present. Its paid up capital stands at Rs.100 crore.

‘Expedite the process’

It may be recalled that last month, Finance Minister P. Chidambaram had asked officials to expedite the divestment process to enable the PSUs to hit the stock markets in time. However, the volatility on the bourses was a major hindrance at that point of time. Now, with the stock market following the domestic reform measures and the U.S. Fed action by way of QE3 (quantitative easing), the sell-off environment is much better.