DIVESTMENT IN STAKES

union-minister-alleges-lobby-behind-campaign-against-psu-sale

Union minister alleges lobby behind campaign against PSU sale

When the government is eying to raise Rs 2.1 trillion through disinvest to put the economy on track, Union minister Rajkumar Singh stirred a hornets nest by alleging that a lobby is campaigning against PSUs and wants their privatisation.

The minister started off by taking aim at the power sector but he soon expanded scope of his remarks. He spoke about Air India too when he said that he would not speak about its proposed privatisation, he largely encounters state-owned airlines when he travels overseas.

The Centre hopes to raise Rs 2.1 trillion in 2020-21 financial year by divesting stakes in some state-owned companies. Process of selling its entire stake in Air India has already started however earlier effort failed. Singh lashed out at what he termed the lobby that keeps speaking out against PSUs.

14 Feb 2020
stc:-what-does-govt-want-

STC: What does govt want?

Solution lies in the problem itself but it requires to be fixed. BSNL, Air India and several others are often in the lime-light but for State Trading Corporation (STC) appears to be daydreaming. There is no full time CMD for over three years and no full time director finance for over four years, a number of criminal and legal proceedings going on for recovering more than Rs 2,000 cr.
It is always easy to blame the government as several senior officials working in CPSEs say that government should close it down while some others say that moves to close STC would hamper recovery process and completion of criminal proceedings.

06 Jan 2020
union-minister-alleges-lobby-behind-campaign-against-psu-sale

Union minister alleges lobby behind campaign against PSU sale

By IndianMandarins 14 Feb 2020

When the government is eying to raise Rs 2.1 trillion through disinvest to put the economy on track, Union minister Rajkumar Singh stirred a hornets nest by alleging that a lobby is campaigning against PSUs and wants their privatisation.

The minister started off by taking aim at the power sector but he soon expanded scope of his remarks. He spoke about Air India too when he said that he would not speak about its proposed privatisation, he largely encounters state-owned airlines when he travels overseas.

The Centre hopes to raise Rs 2.1 trillion in 2020-21 financial year by divesting stakes in some state-owned companies. Process of selling its entire stake in Air India has already started however earlier effort failed. Singh lashed out at what he termed the lobby that keeps speaking out against PSUs.

stc:-what-does-govt-want-

STC: What does govt want?

By IndianMandarins 06 Jan 2020

Solution lies in the problem itself but it requires to be fixed. BSNL, Air India and several others are often in the lime-light but for State Trading Corporation (STC) appears to be daydreaming. There is no full time CMD for over three years and no full time director finance for over four years, a number of criminal and legal proceedings going on for recovering more than Rs 2,000 cr.
It is always easy to blame the government as several senior officials working in CPSEs say that government should close it down while some others say that moves to close STC would hamper recovery process and completion of criminal proceedings.

bpcl,-concor-and-air-india-sale-to-be-delayed;-likely-after-march

BPCL, Concor and Air India sale to be delayed; likely after March

By IndianMandarins 03 Jan 2020

It is likely that the government may not be able to complete sale of BPCL, Concor, and Air India by March-end. Actually the government has to respond to what the potential bidders ask for. Sometimes, they seek time to examine financial statements. Sometimes, they want to do physical due diligence.

The delay in divestment plans comes when the government’s fiscal deficit has touched 115 per cent of the FY20 Budget estimate by November. Besides, revenue from other sources such as taxes is also likely to fall short of the target. The government may miss the tax target of Rs 24.6 lakh crore by at least Rs 2 lakh crore on account of the corporation tax rate cut, lacklustre GST collections, and the economic slowdown. As much as 42 per cent of the revenue collections (excluding cess and surcharge) will go to states.

The government had set a disinvestment target of Rs 1.05 lakh crore for 2019-20. However, in FY20 so far, the government has managed to raise Rs 17,364 crore through disinvestment; 84 per cent of its disinvestment target is yet to be realised.

disinvestment-of-beml:-govt-initiates-process

Disinvestment of BEML: Govt initiates process

By IndianMandarins 16 Dec 2019

The government is likely to sell its 28 per cent stake in Bharat Earth Movers Limited (BEML) through strategic disinvestment to retain 26 per cent after dilution of its shareholding in the public sector undertaking. The government holds 54.03 per cent stake in BEML.

BEML, a mining equipment maker, has diversified into manufacturing of rail coaches and defence production that already accounts for almost half of its current topline.

Cabinet Committee on Economic Affairs (CCEA) in October, 2016 had given an in-principal approval for strategic disinvestment of 26 per cent equity shares in BEML. Sources said that the government will divest 28 per cent of its stake in the company through strategic disinvestment and there is no plan to demerge the business verticals.

The government has set an all-time high disinvestment target of Rs 1.05 lakh crore, up from Rs 90,000 crore projected in the Interim Budget 2019-20 in February. In 2018-19, the Centre raised Rs 84,972 crore from CPSE disinvestment, while in 2017-18, the figure was Rs 1, 00,056 crore.

CCEA has recently approved strategic disinvestment of its equity shares in five PSUs – BPCL, Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), Tehri Hydro Development Corporation (THDC) and North Eastern Electric Power Corporation (NEEPCO).

sbi-to-divest-8.25-per-cent-stake-in-uti-amc

SBI to divest 8.25 per cent stake in UTI AMC

By IndianMandarins 05 Dec 2019

Executive Committee of the Central Board of Directors (ECCB) of SBI at its meeting accorded final approval for divestment of its stake in UTI AMC up to 8.25 per cent through IPO by way of offer for sale of up to 1,04,59,949 equity shares subject to the approval of the SEBI and/or such other concerned authorities and departments.

SBI, LIC, PNB and Bank of Baroda hold 18.5 per cent stake in UTI AMC, each. The rest is held by American company T Rowe Price. SBI has its own AMC (asset management company) business. SEBI rules introduced in March 2018 put a cross-holding limit which does not allow a shareholder who has at least 10 per cent stake in a mutual fund to hold a similar-sized stake in another fund house. Board positions would also have to be given up.

paving-ways-to-ease-out-air-india-sale

Paving ways to ease out Air India sale

By IndianMandarins 04 Dec 2019

The Centre is considering amending a rule that allows overseas control of local airlines that may help debt ridden national carrier lure a foreign suitor after multiple failed attempts for its disinvestment. Department for Promotion of Industry and Internal Trade at a meeting in November had asked aviation ministry if it would be feasible to change the so-called substantial ownership and effective control clause.

Actually this rule mandates that control of an airline always remain in Indian hands, so this has been one of several reasons global firms have been wary of bidding forAir India. Doing away with the substantial ownership clause will enable an overseas stakeholder weigh in on major decisions of local airline? That may lure foreign investors to the Air India sale without forcing the government to go down the politically contentious route of lifting the cap on overseas equity investment.

At present, foreign airlines are barred from buying more than 49 per cent in a local carrier, and foreign investors, other than airlines, need government approval to buy a stake bigger than 49 per cent. Finance Minister Nirmala Sitharaman in her budget speech in July had said Prime Minister  Narendra Modi’s government will look into suggestions of opening up sectors including aviation to more foreign investment. It has already eased rules in a number of areas such as retail, manufacturing and coal mining.

crack-within:-rss-affiliate-sjp-opposes-sale-of-pses

Crack within: RSS-affiliate SJP opposes sale of PSEs

By IndianMandarins 02 Dec 2019

On one hand the Modi government is trying to infuse more liquidity into the market by trying to disinvest some of the PSUs on the other one of the affiliate organizations of the Rashtriya Swayamsevak Sangh – Swadeshi Jagran Manch -- is opposed to sale of PSEs including of the BPCL.

This is to recall that the Modi government had to surrender its reforms agenda particularly Land Acquisition bill, in the face of opposition from within the Sangh Parivar five year ago. The government is facing renewed resistance from SJM on privatising PSEs.

The government has proposed strategic sale in PSEs including in profit-making BPCL, to meet its disinvestment target, which would help shore up GST shortfalls and manage the mounting fiscal deficit. The SJM is of the view that the Modi government’s proposed strategic disinvestment of PSEs was an “imprudent business decision” and “against national interest”.

The SJM demanded a white paper on the previous disinvestment of HPCL, where ONGC acquired the equity. How has this benefited the operations of HPCL. Not just SJM, but the Congress, TMC and Left parties opposed privatisation and disinvestment of 28 PSEs.

On the strategic sale in BPCL, it said rumours are doing rounds that the Saudi Aramco is eyeing these assets. “This is not only unacceptable but also dangerous. The asset created with the national sentiments and hard work shouldn’t land up in the lap of the foreign oil companies — who see these assets only as a statistic to swell their valuation,” the SJM said.

psu-stocks’-underperformance-may-hurt-rs-1-lakh-cr-disinvestment-dream

PSU stocks’ underperformance may hurt Rs 1 lakh cr disinvestment dream

By IndianMandarins 20 Nov 2019

Underperformance PSUs in domestic stock markets is expected to weigh on the government’s ambitious asset sales target of Rs 1.05 lakh crore this financial year. The BSE PSU Index comprising 61 stocks has fallen 7.91% since April 1 comparing with 4.65% gain in Sensex in the same period.

State-run firms like Indian Bank, Chennai Petroleum Corp. Ltd, IFCI Ltd, Oriental Bank of Commerce, Central Bank of India and Allahabad Bank have lost as much as 35-55% of their market value since April.

The government had in Union Budget 2019-20 set a record disinvestment target for the fiscal, an increase from ₹90,000 crore projected in the Interim Budget 2019-20. The government has, however, managed to raise a meagre ₹15,483.05 crore so far. With only four months left for this fiscal to end, achieving the disinvestment target appears a tall task.

Since July when the budget was presented, the BSE PSU Index has shed 10.16% while the Sensex has risen 2.70%. The government has stuck to its fiscal deficit target of 3.3% of GDP for FY20 despite revenue collections falling short of estimates. This makes it even more crucial for the government to sell stakes in state-run firms to raise funds.

From the fiscal deficit standpoint, disinvestment proceeds will be key to bridge the revenue shortfall, given the lower-than-expected collections in GST and the recent cut in corporate tax.


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