New Delhi, Dec. 22: The cabinet tonight approved the proposal to offload the Centre’s residual stakes in Balco, IBP, Videsh Sanchar Nigam and Indian Petrochemicals Corporation (IPCL).
The government holds 49 per cent in Balco, whose stake sale was one of the first big-ticket divestment proposals that was pushed through amid stiff political opposition. The 51 per cent sale to Sterlite took place in 2002, overriding objections from several quarters to the way the shares were valued and bidding conducted.
To make sure there is little resistance to the valuation process, the cabinet has decided to enlist SBI Caps, the merchant banking arm of State Bank of India, to assess the true worth of the shares that will be offloaded.
In Videsh Sanchar Nigam, now controlled by the Tatas, the Centre will put its 26 per cent equity on the block. Days back, the government decided to sell its residual stake in Maruti Udyog and invited expressions of interest from public sector financial institutions and banks for selling 8 per cent in the country’s largest car manufacturer, now in Suzuki’s grip. It owns a total of 18.28 per cent, representing 5,28,24,020 shares.
Only public sector financial institutions and banks can bid for the shares, which could even go to a single buyer. Asset management companies and mutual funds managed by these institutions cannot participate in the transaction, which should fetch the Centre Rs 1,500 crore.
The divestment of residual equity in these companies is unlikely to raise the hackles of the Left parties, which have made it clear in the past that they will not stall the sale of government shares in firms that that have already passed into the hands of private owners.
This evening’s cabinet meeting had raised hopes that the government would also sell the small stake it holds in CMC, the computer training firm now a subsidiary of TCS.
Under a plan approved by a committee of secretaries recently, the Centre needs to raise Rs 5,000 crore by selling its ownership in a few other public sector companies. These include Bharat Sanchar Nigam, Power Finance Corp, Shipping Corporation and PowerGrid. The proposal is to offload 5 to 10 per cent in these firms.
The government is keen to push through selloff because the last quarter of the current fiscal is round the corner and it must rustle up the cash to paper over deficits.
Starting this year, all money raised from stake sales in PSUs will flow into the National Investment Fund, which will support social sector plans and the revival of weak, but viable, companies under the control of the government.