The Telegraph
Since 1st March, 1999
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Cut-price PSU slice feels nice
- Curtains go up on the biggest discount season for small investors in the sale of government stake

New Delhi, Feb. 17: The Centre could sell its stake in six firms to small investors at prices less than those in the market.

“The government has always, as we have shown in the case of Maruti, wanted to reward small investors. But the extent of the discount, and whether there would be a lock-in period for sales to public, will be spelt out in the proposal we will send to the finance minister,” disinvestment minister Arun Shourie said here today.

Shourie, who will submit a report to finance minister Jaswant Singh on how PSU shares should be sold, hinted that there was no one-size-fits-all policy for now. “Each company is so different, we have to do different things,” said Shourie on the question of differential pricing for the forthcoming public offerings. “Do not hold me to a particular standard. We will have to craft the things in different ways.”

Reports of a discount propelled the shares of Indian Petrochemicals Corporation (IPCL), whose public offering opens on February 20, by 2.2 per cent on Dalal Street today.

Shourie said the price band for the offering would be announced after the close of market on February 19. Roadshows for the sale were kicked off in Mumbai today.

The government has already given management control of IPCL — incorporated in 1969 and with a fixed asset base of Rs 8,995 crore in 2002 — to the Reliance group.

Shourie said the Gail offering would be made in the domestic market. “Due to time constraints and because the figures for divestment have already been included by the finance minister in his vote-on-account estimates on the budget deficit, it was decided that sales will take place in the domestic market,” the minister said.

The six offerings are those of IPCL, followed by CMC and IBP on February 23. Then, there will be a sale of 20 per cent equity in STC. After this, the bids for ONGC are likely to be invited on March 3, and for Gail on March 15. The disinvestment ministry expects to mop up around Rs 15,000 crore by divesting the Centre’s holdings in the companies lined up for selloff.

The government had earlier aimed at raising Rs 13,200 crore through disinvestment in the current financial year. However, a Supreme Court ruling stalling the sale of its holding in public sector companies set up under laws passed by Parliament, or nationalised by the legislature, without legislative sanction left the plan in disarray.

The Centre was staring at a huge shortfall of Rs 7,000 crore, unless it managed parliamentary approval for such sales by repealing the acts which set them up or nationalised them.

This forced the government to sell off its residual stakes it has been holding in many state-owned firms, and those privatised in recent years. By doing so, it is a gainer all the way, setting itself on a course that will earn it far more than it had planned at the start of this fiscal.

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