Divestment Street: Big-ticket deals still stuck on slow track

It could be twelve hectic months ahead for M/s Shourie and the new secretary in the disinvestment ministry, the political environment willing. Although almost thirty transactions are in various stages of execution, completion of the big ticket deals, such as that of Hindustan Petroleum Corporation, Bharat Petroleum Corporation, Shipping Corporation of India and National Aluminium, would give the privatisation programme the bang it desperately needs and embellish the budget with its glittering riches.
However, uncertainties still plague the disinvestment process. Take for instance, the privatisation of HPCL. The employees’ unions have already threatened to go on a strike. Worse, they have threatened to do a Nalco to HPCL.
The current fiscal has seen only limited action — the sale of Indian Petrochemical Corporation to Reliance Industries, transfer of management control in Maruti Udyog to Suzuki Motors, sale of Hindustan Zinc to Sterlite Industries and a string of ITDC hotel privatisations.
Total receipts from core disinvestment transactions is less than Rs 3,400 crore. And all indications are that it will remain there.
After all the hype, the Maruti public issue is set to spill over to the next fiscal. Disinvestment secretary Pradip Baijal has said it should be done by May ’03.
The current year’s budget target for public sector restructuring, a head that derives from bureaucratic padding of uncertain disinvestment with the more reliable proceeds of special dividends from PSUs, has been set at Rs 12,000 crore. However, even the milking of some profitable PSUs through interim dividends and special dividends would add only a couple of thousand crores actual kitty, taking the proceeds to Rs 5,000-6,000 crore.
Government sources reckon that the target for the next fiscal would be set at Rs 15,000 crore. In the best case scenario — if opposition to the privatisation process gets diluted — the government could very well exceed the target. After all, the line-up of sell-off candidates is very impressive. HPCL transactions alone would fetch the government about Rs 8,000 crore, and even more, if the bidding gets aggressive.
Then divestment in National Fertilisers, Engineers India, Shipping Corporation, State Trading Corporation, Hindustan Organic Chemicals and a few other PSUs could fetch the government some Rs 5,000 crore. Nalco could bring in another Rs 5,000 crore and the complete exit from Maruti Udyog could fetch the government up to Rs 1,414 crore.
In the business as usual scenario, the government would be lucky if it got to the Rs 10,000 crore mark even with an impressive line of candidates on the block.