Ficci for sale of equity through public offer

NEW DELHI: Amid the ongoing controversy over the methodology of disinvestment, apex industry association Ficci on Tuesday suggested that the government should refrain from privatising PSUs through sale of equity to an individual or a company and instead should take recourse to public offer route in India and abroad.
"Not only this will prevent monopoly but also help get better value for equity through a float in overseas exchanges like Nasdaq", A C Muthiah, new President of the Federation of Indian Chambers of Commerce and Industry, said.
Citing disinvestment as a major weakness of coalition politics as was demonstrated by the ruling National Democratic Alliance (NDA), Muthiah said "coalition is the biggest weakness (of the Vajpayee government). They get pulled away in different directions... like in disinvestment, labour reforms."
Through disinvestment by public offer route government could still attain the objective of privatising PSUs, that too by getting better realisation for its equity, he said, adding that it should be in tandem with appointing professional autonomous boards to run the companies.
There was no need to hand over the highly profit making PSUs, particularly in oil sector, like Hindustan Petroleum and Bharat Petroleum, to any individual or a company as the tendency could lead to monopolies, Muthiah, who himself heads the industrial conglomerate SPIC having interest ranging from fertiliser to petrochemicals, said.
Citing the example of China which raised $20 billion from Nasdaq as apart of its privatisation, Muthiah said such methodology will fetch better value to government.
"Instead of outright sale, Government can dilute its stake up to 40 per cent by going to public," he said.
Making a case for allowing public sector undertakings to participate in the disinvestment process, he said " allowing PSUs to bid is not anti-privatisation".