Budget 2012: Government to start early to meet Rs 30k-crore sell-off target

NEW DELHI: Wiser from the fiasco last year, the finance ministry is keen to start disinvestment early in the next financial year to raise the budgeted Rs 30,000 crore, a sum that has never been raised before. It is ready with a list of about 10 companies in which the government will dilute stakes in the next fiscal.

The government has a variety of options to dilute stakes that will allow an early start to disinvestment programme, a finance ministry official told ET.

In the current fiscal, the government manages to raise about 14,000 crore through disinvestment against Rs 40,000 crore budgeted, largely because of poor market conditions that made follow-on offers difficult. Apart from the follow-on offers, the government can use share buybacks, crossholding among state-run companies and auctions to dilute stake in companies it runs.

It raised over Rs 12,000 crore from auction of 5% stake in ONGC earlier this month, though the process was marred by poor management and LIC picked up most of the shares on offer. During 2012-13, the disinvestment department will focus on companies where the government holds more than 90% stake, he added.

MMTC, STC, Neyveli Lignite and Rashtriya Chemicals and Fertiliser are some of the state-run companies in which the government holds more than 90% stakes.

Sebi regulations require that state-run companies have at least 10% public holding. The government has a nearly 94% stakes in Chennai-based Neyveli Lignite, 91% in STC and 99.33% in MMTC. Hindustan Aeronautics and construction company NBCC are likely to come out with their maiden public offers in the next financial year.

"This fiscal, the focus will be on IPOs and on follow on offers of companies where government holding is more than 90%," said the official. The disinvestment department already has Cabinet nod to divest 5% stake in BHEL, 10% in NBCC and 5% in Steel Authority of India.

"IOC (India's biggest oil marketing company) is not on the anvil for a long time," the official added.

Disinvestment secretary Mohammed Haleem Khan, however, said that the finance ministry will not push state-run firms to buy stake into other government-owned companies or for buyback.

"Allowing companies to buy shares of other PSUs is just a sequential reform. As of now state-run firms can invest their surplus with banks and mutual funds. The new enabling provision will give them the freedom," he said.

Administrative ministries are against the buyback mode mainly because the PSUs have projected that the move will hit their expansion plans.