Listing of PSU subsidiaries in Financial Year 2018 disinvestment plan

NEW DELHI: Strategic sales and listing of subsidiaries of state-run enterprises will be the focus areas of the government’s disinvestment plan for the next fiscal, shifting away from the sale of shares in listed companies.

There is also an indication that the government may not push ahead with disinvestment in the current situation as revenue collection seems comfortable with black money disclosures schemes likely to provide some cushion.

Finance and oil ministry officials met last week to look at various disinvestment options for state-run companies, said a government official privy to the discussions, requesting anonymity.

Finance ministry officials will similarly meet officials of other ministries to work out a plan for FY 2017-18 and fix a target.

"We will encourage companies with profitable subsidiaries to get them listed and unlock their value," said the official. Some stake sales may be pushed to next year as market conditions do not augur well for selling oil scrips. Both ONGC and Coal India have profitable subsidiaries.

So far this fiscal, the government has raised Rs 21,432 crore through disinvestment which also includes share buyback by Coal India and NMDC. Specified Undertaking of the Unit Trust of India (SUUTI) sold a part of its holding in L&T, raising another Rs 2,000 crore.

Disinvestment could touch the highest ever in the current fiscal. The government has budgeted for Rs 56,500 crore of revenue from disinvestment, including Rs 20,500 crore from strategic sales in this fiscal.

There were, however, only two offers for sale issues in this fiscal --NBCC and NHPC. "There is no pressure. There has been significant resource generation through the income declaration scheme. Then we have the ongoing demonetisation drive and the black money declaration scheme under Pradhan Mantri Garib Kalyan Yojana," the official added.




Next fiscal, the government will push administrative ministries to fast track the process of strategic sale of companies been identified by Niti Aayog. "The strategic sale process is expected to kick off in the next fiscal. We have around 20 companies, which have been identified. Some of these firms have prime assets including land that can command premium valuation," said another official aware of the deliberations. In October, cabinet okayed Niti Aayog’s proposal for strategic sale in more than a dozen state-run firms.

ET View: Don’t defer strategic sale
It makes no sense to postpone strategic sales, hoping that a return of bullish sentiments could shore up stocks and garner larger proceeds from disinvestment. The markets are likely to remain volatile for a while, and waiting for the ‘right’ stock prices may be rather futile, akin to Waiting for Godot. In parallel, it would make sense to boldly divest and unlock shareholder value in a maturing segment like the refining and marketing of petroleum products.