CONCOR DIVESTMENT ON THE CARDS

CONCOR DISINVESTMENT ON CARDS ALONG WITH OTHERS, GOVERNMENT TO RAISE `37000 CRORE

 In a bid to raise the much needed capital, Finance minister Arun Jaitley has approved the disinvestment plan given by department of disinvestment (DOD), to raise budgeted `37000 crore during FY15. As per the arrangement Container Corporation has been inducted as a surprise entry into the plan for 10 per cent divestment. At the same time other prominent companies included into the approved plan are NHPC, Coal India, SAIL, MOIL and SJVN in which 10 per cent of the government share holding will be off loaded during the current fiscal.

 Government is also planning to boost IPO market and to give this a push, initial public offering plan of Tehri Hydro Development Corporation (THDC) has been included for the current fiscal. Important thing to note is that former Finance minister P Chidambaram has budgeted a receipt for `36925 crore via disinvestment of PSUs during FY15 in the interim budget while `20000 crore has been budgeted via residual stake sale in private companies. Arun Jaitley has kept that budgeted figure unchanged, while approving the plan

PROPOSAL INVITED TO VALUE GOVERNMENT’S HZL STAKE

Government seems to be too serious about selling residual stake in private companies. In all probability the fi rst company under this would be Hindustan Zinc (HZL), as fi nance ministry has invited proposal from the merchant bankers and CA fi rms to determine the fair value of the government’s 29.54 per cent stake in the company. Firms have to fi le their proposal by June 27, aft er which government may start the offl oading process from HZL. Earlier, UPA government had proposed to off load government holdings in HZL and Balco through open auction route but new government seems eager to sell the stake via block deal so that they would be able to generate some premium over market price and fail valuation. At current market price of Rs169 per share, government’s stake in HZL is valued at around `22000 crore. In the past Vedanta group has proposed to acquire the residual stake in the company along with 49 per cent stake in Balco at around `17000 crore. In addition to these two companies, government holds shares of various private companies like ITC, L&T and Axis bank in specifi ed undertaking of UTI (SUUTI) that amounts to more than `60000 crore at current valuation. UPA government has budgeted `20000 crore via residual stake sale in the interim budget but sources are of the opinion that government may raise this limit as it has to fi nance its development needs.

 PM SCRAPS 4 CABINET PANELS

 To speed up decision making process, Prime Minister Narendra Modi scrapped four cabinet committee formed by UPA government. This committee includes much hyped Unique Identification Authority (UIDAI) that gives Aadhar card to citizen. In addition to this cabinet committee on prices and committee on World Trade Organization matters have also been scrapped and responsibility of all these committees has been given to Cabinet Committee of Economic Affairs (CCEA), which has been strengthened further to give spurt in decision making. Already CCEA has been entrusted with the responsibility of dealing with matters of high economic importance such as clearing big-ticket projects, approving FDI or deciding on food export/import. Committee on Management of Natural Calamities is the other committee to be scrapped.

 GOVERNMENT ALL SET TO SELL SICK PSU’S

 As expected earlier, new government is moving very fast in the process of selling sick PSUs. Ministry of heavy industries has started a process of identifying public sector companies that are sick and can be sold. In this process ministry has zeroed on around 15 companies that include Tyre Corporation of India, Scooters India, Tungabhadra Steel, Richardson and Cruddas, HMT Bearings, Hoogly Dock and Port Engineers and CITW. As per the tentative plan government wants to sell those companies to which revival package has been given earlier but failed.

Also ministry is making a list of those companies which are terminally ill and can be sold off . As per the sources government is of the view that process of providing revival package should be speedup so that accountability can be fixed and if that package fails then company should be sold off swiftly. Government is also mulling to give more power to Board of Restructuring of Public Sector Enterprises (BRPSE) so that its recommendation can be implemented in a shorter time span. Earlier BRPSE has given recommendation of 7 sick PSUs via joint venture investment. Currently there are 50 PSUs that are loss making, these include ITI, Air India, MTNL, BSNL etc. To speed up the selling process government is also mulling to change new company law requirement regarding selling sick PSUs that requires National company law tribunal approval for strategic sale.