Finance Ministry asks Nalco to buyback its 25% equity

Looking to tap PSUs' funds to make up for shortfall in disinvestment proceeds, government has asked state-run aluminium maker Nalco to buyback 25% of its shares to garner an estimated Rs 3,250 crore.

"Finance Ministry has written to us to direct Nalco to buyback 25% of the shares," Mines Secretary Balvinder Kumar told PTI.

He also said the Nalco board will consider the proposal. Sources said that government may raise about Rs 3,250 crore by selling 25% of its shares to Nalco. However, as per the current stock price of Rs 34.50 per share, the government will garner about Rs 2,223 crore only.

The government was hoping to sell 10% stake in Nalco to raise about Rs 1,300 crore but volatile markets have derailed its plans.

Faced with fiscal crunch due to lower disinvestment proceeds, the government is looking at other options like more dividend and bonus share issues from the PSUs this fiscal. Recently the government asked central public sector enterprises to pay 30% dividend and cash-rich PSUs like Coal India to issue bonus shares.

Against a target of Rs 69,500 crore, government has in so far garnered Rs 12,700 crore in 2015-16. Due to volatile market conditions, it has been able to sell stake in only four PSUs - IOC, PFC, REC and Dredging Corp.

The likelihood of any major stake sale in the remaining three months of 2015-16 is bleak. Last week, Finance Minister Arun Jaitley said government will come out with an alternative strategy in 2-4 weeks to push PSU disinvestment in volatile markets. For disinvestment in 2015-16, the government had lined up over 20 PSUs. These include, 10% stake sale each in OIL, Nalco, NMDC, Coal India and 5% each in NTPC, ONGC, BHEL.