Government stake sale in CIL, ONGC, SAIL by next month end?

Finance minister Jaitley

THE government is running against time to wrap up its disinvestment plan for the fiscal 2014-15 with hardly few months left. Finance ministry officials expressed the hope that Coal India, ONGC, SAIL, and NHPC will hit the market by the end of January.

The government has not taken its call...

for selling stake in Coal India and ONGC as the department of disinvestment was watching market conditions.

There is no clarity yet on stake sales in Concor, REC, PFC, HAL and RINL, some of which might be shelved.

According the current share prices of the companies, the sale of a 10 percent stake in Coal India will bring in revenues amounting to around Rs 22,000 crore, five per cent in ONGC Rs 16,000 crore, 11 per cent in NHPC Rs 2,600 crore and five per cent in SAIL Rs 1,700 crore.

The combined proceeds from these four public-sector behemoths would be around Rs 43,000 crore, compared with the Budget target of raising Rs 36,925 crore from stake sale in state-run firms during 2014-15.

In a written reply in the Rajya Sabha, Minister of State for Finance Jayant Sinha said the expected realisation from ONGC was Rs 11,477 crore, Coal India Rs 15,740 crore and NHPC Rs 1,976 crore. These lower expectations could be on account of the discounts the government might offer to attract more participation from retail and institutional investors.

The minister said the government had approved revival of seven sick central PSUs - HMT Machine Tools, Tyre Corporation, Tungabhadra Steel Products, HMT Bearings, Richardson & Cruddas, Central Inland Water Transport Corp and Hooghly Docks & Port Engineers Ltd - through the disinvestment or joint venture route.

Finance minister Arun Jaitley recently met finance secretary Rajiv Mehrishi, and disinvestment secretary Aradhana Johri, to take stock of the disinvestment plan for the year. A media report quoting official sources said the sale of stake in Coal India could take place in tranches, as the company's shares were undervalued at present.

The proceeds from the big four stake sales could have been Rs 46,302 crore, if the sales had taken place in mid-July, added the media report.

While a bull run inspired by the Narendra Modi government continues in the broader market, delays in PSU stake sales have given investors time to offload these shares which has eroded their valuations.

"The government plans to sell stakes in Coal India, ONGC, SAIL, and NHPC by January-end," the report quoted a senior finance ministry official as saying.

Road shows for Coal India and ONGC were near completion, and one of the two could hit the market by the middle of December. A decision on the remaining smaller stake sales would be taken after that.

"PFC and REC disinvestments are yet to receive clearance from the Cabinet. As for the initial public offerings, HAL seems unlikely this year, while the draft red-herring prospectus for RINL has been sent to the market regulator," the official said.

The combined proceeds from sale of five per cent each in Concor, PFC, REC and MOIL could be about Rs 5,210 crore at current stock prices, while the government expects about Rs 5,500 crore from 10 per cent stake sales in HAL and RINL.

The Centre is also mulling to raise at least Rs 15,000 crore from sale of its residual stake in Hindustan Zinc Ltd (HZL) and Balco, and Rs 6,500 crore from part-sale of the stake it holds in Axis Bank, ITC, and Larsen and Toubro, through Specified Undertaking of UTI (Suuti).