Roadmap soon for divestment in doses
Get ready for small-slice selloffs. The government will shortly unveil a roadmap to divest small portions of its holdings in several PSUs with focus on follow-on public offers of state-owned firms that are already listed on stock exchanges.business Updated: Oct 11, 2009 20:35 IST
Get ready for small-slice selloffs. The government will shortly unveil a roadmap to divest small portions of its holdings in several public sector undertakings (PSUs) with focus on follow-on public offers of state-owned firms that are already listed on stock exchanges.
* The government is planning to sell PSU stakes in small doses.
* The planned disinvestment roadmap effectively means a return to the policy of January 2005, when the government decided, in principle, to list large, profitable public sector companies and selectively sell a minority stake in listed, profitable firms.
* The idea is for the government to retain full management control so as not to disturb the public sector character of the companies.
“The focus would be first on profitable companies listed with less than 10 per cent public shareholding,” said a senior government official who asked not to be identified.
There are 214 functioning PSUs controlled by the Centre, of which only 160 are making profits.
Of these only 44 are listed on stock exchanges, of which 12 have public stakes of less than 10 per ent. These include NMDC, MMTC, Neyveli Lignite and Hindustan Copper.
In addition to the follow-on offers, the government plans to list profitable PSUs under the Centre that have a net worth of more than Rs.200 crore.
In this, the government will piggy-back on fresh equity issues by these firms in the market. Such companies include Coal India Ltd, which plans to go public.
“CIL has been conferred Navaratna status in 2008 with the condition that it will be listed (in stock markets) within three years. Accordingly, steps are being taken to convert CIL first into a public limited company and thereafter for listing and or disinvestment,” the official said.
The Navratna status for government-owned companies was introduced in 1997 to identify firms that had comparative advantages and to support them to become global giants. The boards of such companies are empowered with greater autonomy to take investment and other decisions.
Public listing of companies is considered by policy makers as necessary to boost their operational efficiency.
“Public shareholdings of companies give incentives, which mimic private incentives. This would raise operational efficiency manifold,” the official said.