Disinvestment kitty swells to Rs 34,800 cr this year

The government received Rs 34,800 crore from the sale of minority stake in an array of state- owned firms this year even as it prepared ground for the first strategic sale of PSUs in over 12 years.

The government received Rs 34,800 crore from the sale of minority stake in an array of state- owned firms this year even as it prepared ground for the first strategic sale of PSUs in over 12 years.

This year will be also remembered as watershed for the government's disinvestment programme as Prime Minister Narendra Modi sought to transform the Disinvestment Department from a mere seller of government stake in central PSUs to DIPAM - the manager of its assets.

The renaming of the 17-year old Department of Disinvestment (DoD) to the Department of Investment and Public Asset Management (DIPAM) signalled a revamp in the way government manages its investments in state enterprises by focusing on monetising non-strategic holdings -- from surplus land and assets with a PSU to privatising non-core companies.

The year saw exchequer getting about Rs 34,800 crore from disinvestment of minority government stake in PSUs, a tad lower than the record high of Rs 35,236 crore collected through part-sale of its stake in 2015.

The disinvestment proceeds stood at about Rs 18,000 crore in 2014 and Rs 22,000 crore in the previous year.

The government in 2016 focussed on identifying and doing the spade work for strategic sale of some of the nearly 200 PSUs while asking cash-rich companies to put their idle money to use by either doing share buy-backs, bonus issues and special dividend.

NITI Aayog was asked to prepare a list of PSUs that can be outrightly divested. Scooters India, Pawan Hans, Hindustan Newsprint and units of Cement Corporation of India were among those identified.

Selling four steel plants of NMDC and Steel Authority of India as well as offloading 26 per cent stake in Bharat Earth Movers Ltd to a strategic bidder is on the cards. In addition, Hospital Services Consultancy Corporation Ltd, National Project Construction Corporation Ltd, and Engineering Project (India) Ltd are to be merged with other sectoral CPSEs.

Through share buybacks and strategic sale, the government is eyeing about Rs 40,000 crore from PSU share sale in 2017.

Parallelly, the minority disinvestment continues starting with Engineers India Ltd, NTPC and Concor.

With no strategic stake sale policy in place, the DoD, which was carved out of the Finance Ministry in 1999, could not privatise any PSU till last fiscal. But now a Core Group of Secretaries on Disinvestment or CGD on strategic sale has been set up.

From its first CPSE stake sale in 1991-92, DoD has surely come a long way and has transformed its role to giving ideas on how to monetise idle assets of PSUs as well as emulate private sector by restructuring their capital and utilising their cash balance for resource augmentation.

NITI Aayog has prepared a list of public sector units where the government can sell its majority stake to private companies in order to bring in greater efficiency and professionalism in functioning.

Based on its suggestions, the DIPAM has finalised a model of strategic disinvestment.

Since the beginning of the year, the department got into full swing and divested stake in Engineer's India which fetched the exchequer Rs 642 crore, followed by NTPC (Rs 5,014 crore) and Concor (Rs 1155 crore).

Besides, it all bought back shares in two unlisted PSUs-- Hindustan Aeronautics (Rs 4,284 crore) and Bharat Dynamics (Rs 199 crore). All these happened in the January-March quarter.

Beginning April, the start of financial year, the department has focused more on buy back with five cash rich PSUs buying back their shares. While NALCO buy back fetched the government Rs 2,832 crore, NMDC got Rs 7519 crore, MOIL (Rs 793 crore), BEL (Rs 1802 crore) and Coal India (Rs 2,638 crore).

Besides, the offer for sale of NHPC and NBCC garnered Rs 2,716 crore and Rs 2,201 crore and paring some of SUUTI Holding fetched exchequer Rs 2,096 crore.

For the fiscal ending March 2017, the disinvestment target has been set at Rs 56,500 crore. Of this Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale. The fiscal target continues to remain far off with total collections of about Rs 24,000 crore in the nine months of the financial year so far.

In his Budget speech, Finance Minister Arun Jaitley said: "We will encourage CPSEs to divest individual assets like land, manufacturing unit to release their asset value for making investments in new projects.

"We will adopt a comprehensive approach for efficient management of the government investment in CPSEs by addressing issued such as capital restructuring, dividend, bonus shares."

The CGD will be headed by Cabinet Secretary and also include secretaries to department of revenue, economic affairs, expenditure, disinvestment, public enterprises, corporate affairs and legal affairs besides those of administrative ministries concerned with the PSU.

The last strategic sale took place in Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpyaee, when 72 per cent of government stake was sold to Indo Wagon Engineering for Rs 18.18 crore.

Incidentally, the first strategic sale in a PSU also happened under the NDA rule in 1999-2000 when the government sold 74 per cent equity in Modern Food Industries to Hindustan Lever for Rs 105.45 crore.