Govt readies PFC, others for sell-off as fiscal deadline looms

The government is likely to sell a 5 per cent stake in both Power Finance Corporation (PFC) and Dredging Corporation of India as it races to narrow its fiscal gap to a targetted seven-year low by March, when the financial year ends.

"Five per cent of the shares of PFC could be sold next week," a senior finance ministry official said on Friday, declining to be named as he was not authorised to speak to the media.

The PFC share sale could fetch Rs 1,835 crore($298 million) at current market prices.

Prime Minister Narendra Modi aims to trim the fiscal deficit to 4.1 per cent of gross domestic product this fiscal year and to that end it wants to raise $10 billion in asset sales.

However, finance ministry sources say it is only likely to get $4 billion to $5 billion from sales and so far it has raised a little more than $300 million.

"Current prices are attractive to own PFC, but the government could have waited for a higher price," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm based in Mumbai.

The state owns 72.8 per cent of the financing company, whose shares were up 0.35 per cent at Rs 279.75 at 0855 GMT.

The share price has fallen by more than 6 per cent this year while the benchmark Sensex index has added 6 per cent.

Apart from PFC and Dredging Corp, the government has invited bids from merchant bankers this week for 10 per cent stakes in miner NMDC, Indian Oil Corp and National Aluminium Co.

It has also called for bids for a 5 per cent share sale in engineering equipment maker BHEL.

If all these sales materialise, India could raise more than Rs 20,000 crore ($3.25 billion), based on current market valuation.

Next in line could be state-run manganese miner MOIL Ltd with a 10 per cent stake sale, the finance ministry official said.

($1 = 61.4900 rupees)

(Additional reporting by Abhishek Vishnoi in Mumbai)

(Reuters)