Govt Eyeing Rs 50000 Cr Disinvestment In PSUs By FY11 (07-Mar-2010)
The Union government plans to raise Rs 50,000 crore through share sale in PSUs by 2010-11.
This they plan with Prime Minister Manmohan Singh giving green signal for disinvestment.
However, Disinvestment Joint Secretary Satish Pradhan stated that with the thrust offered by the Prime Minister, they are eyeing a disinvestment of Rs 50,000 crore in PSUs by 2010-11.
This he said on sidelines of NMDC''s FPO announcement.
He added that the money collected through disinvestment would be recycled into social sector capital expenditure.
It will be in projects like IITs, hospitals and village roads.
Meanwhile, he said that there is a misapprehension that this money will be used to meet the salary expenses of government babus, but it is not the case.
The FPO by NMDC is a once in a lifetime chance for retail buyers to be part of the biggest producer of iron ore in India.
It accounts for 11% of iron-ore production.
NMDC has the best iron-ore deposits with a Fe content of 67% which is the highest in the world.
On the other hand, he said that at present NMDC shares were traded at Rs 425 and the price band for FPO would be moderately less than this.
Previously, it was said that during 2010-11, the state-owned companies led by power sector PSUs will be raising over Rs 56,000 crore debt from the money market, a growth of about 26 per cent over the current financial year.
Apart from this the government will be borrowing an additional amount of Rs 3.45 lakh crore from the money market to bridge the fiscal deficit, the gap between receipts and expenditure during the next fiscal.
On the other hand, the budget papers shows that the power sector PSUs like NTPC and Power Grid Corporation, will be issuing bonds and debentures of over Rs 20,232 crore in 2010-11 as against Rs 14,500 crore in the current fiscal.
Earlier, with petroleum and power companies lining up Rs 1.20 lakh crore investment, major central public sector undertakings (PSUs) allocated a enormous capital expenditure of Rs 2.78 lakh crore in the next fiscal.
As per the roadmap listed in the Union Budget 2010-11, the PSUs in the telecom and road transport sectors will also be among the major spenders in the next fiscal.
Meanwhile, it was said that the government is expected to introduce a fixed time-frame during which the nomination of independent directors should be finished by state-run companies.
This is with the aggressive disinvestment of PSUs being planned for the coming months.
Secretary in the Department of Public Enterprises Bhaskar Chatterjee stated that they are looking at shortening the time span of the process of nominating independent directors.
Moreover, the government is on the right track to achieve the target of Rs 20,000 crore it had set to raise by divesting stake in public sector units in this fiscal.
The Centre has raised Rs 4,259 crore through the initial public offers (IPO) of Oil India and power company NHPC this fiscal.
The government stated that in order to help cut costs and reduce pollution, all state-owned companies under the Department of Heavy Industry should go in for energy audits.
Ambuj Sharma, joint secretary in the department stated that they want that the remaining PSUs under the department should also do energy audit and in a time bound manner.
This would help the companies reduce on their costs and in earning carbon credits.
On January 27, 2010, it was said that as the government seeks to perk up their corporate governance standards before possible listing on the stock exchanges, it wants all public sector enterprises (PSEs) to put in place a whistle-blower policy.
A whistle-blower policy provides safeguards against victimisation of any employee should he expose wrongdoing at his workplace.
Moreover, Union Minister of State for Heavy Industries Arun Yadav stated that disinvestment process of PSUs has not been stopped but discussions were underway.
If all goes well disinvestment of 10 to 15 PSUs will take place in a year whereas after the budget session, 10 to 15 PSUs will see disinvestment in a year.
The condition was favourable for PSU''s to go in for public issue to raise finance while a survey has been conducted in this regard.
It was said that as far as the disinvestment policy is concerned, it''s business as usual as the government has adopted small is beautiful strategy in order to carry out stake sales.
But, however, the finance ministry has invited responses from 60 odd unlisted companies to know about their plans to shed government stake.
Not all are ready to tap the markets yet while the strategy clearly is, offloading small chunks of government equity at fairly regular intervals.
In India, public sector undertaking (PSU) is a term used for a government-owned corporation (company in the public sector). The term is used to refer to companies in which the government (either the Union Government or state or territorial governments, or both) owned a majority (51 percent or more) of the company equity.
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