The government is pretty confident of pulling off its disinvestment target of Rs54,000 crore for the current fiscal, although the sell-off kitty currently reads a mere Rs1,325 crore.
“To meet the disinvestment target, large issues have been lined up. Two of them — Indian Oil Corp and Coal India — would contribute mainly to the disinvestment kitty,” Alok Tandon, joint secretary, Department of Disinvestment, told reporters at a conference here to announce the launch of Power Grid follow-on public offer (FPO). While he refused to put a timeline to these issues, he added that the officials concerned had to forge a consensus, which explains the delay.
He said further that to meet the disinvestment target, the government is not just focussed on FPOs and offers for sale but also other instruments like buyback of equity, citing the example of NHPC, which started its buyback offer of Rs2,368 crore on November 29. “Other instruments include a special dividend from cash rich PSUs. So, all these things put together, we would meet Rs40,000 crore target,” Tandon added.
However, market participants are taking the government’s claim with a pinch of salt. They contend that the government has missed its disinvestment target consistently for the past three fiscal years. And in the current fiscal, it has managed to mop up Rs571.71 crore from MMTC, Rs259.56 crore from Hindustan Copper, Rs101.08 crore from National Fertilisers, Rs30.17 crore from India Tourism Development Corporation, Rs4.54 crore from State Trading Corp and Rs358.21 crore from Neyveli Lignite.
SP Tulsian of SP Tulsian.com told dna that the government’s PSU stake sale target of Rs40,000 crore seems far-fetched as “the appetite for these shares continues to remain depressed, but they could manage to achieve an overall disinvestment target of Rs54,000 crore”. “They will try to fall back on the Special Undertaking of Unit Trust of India (SUTTI) and a residual stake in Hindustan Zinc and Balco. While SUTTI could fetch them Rs40,000 crore, HZL and Balco stake sale could bring Rs 25,000 crore,” he added.
The government is also considering a sale of 10% equity in both Coal India and Indian Oil Corp, which are likely to yield Rs17,300 crore and Rs4,900 crore, respectively, at the current market price. It’s likely to wrap up these issues by mid-December despite severe opposition from several quarters.
While in the case of Indian Oil, the oil marketer itself is actively opposing the divestment due to depressed stock market conditions, Coal India workers have repeatedly threatened to go on strike over divestment. “It would be able to go ahead with a stake sale of 5% in the case of Coal India, but stake sale of IOC looks difficult. As for Coal India, it will not able to go ahead with two tranches totalling 10% as there is no such big appetite,” Tulsian said.
Meanwhile, Power Grid Corp, on Monday announced a follow-on public offer of 787,053,309 equity shares at a face value of Rs10 each, which will open December 3 and close on December 5 for QIB bidders and December 6 for all other bidders. The price band for the issue is fixed between Rs85 and Rs90 per equity share while a discount of Rs4.50 will be offered on the offer price to retail investors and eligible employees.
Power Grid is confident of getting a strong response from retail investors following the discount.