NEW DELHI: The proposed stake sale in PSUs, which could potentially fetch Rs 20,000 crore to the country’s exchequer, would actually depend on market conditions, according to the government.
The Department of Disinvestment (DoD) is in the process of appointing merchant bankers for stake sale in 10 state-owned companies - Oil India, Container Corp, NMDC, MMTC, ITDA, NTPC, Engineers India, BEL, Nalco and Hindustan Copper.
“The market and other related conditions will determine transaction completion time,” DoD told merchant bankers to their query whether all the transactions would be completed in three years.
It added that the government sought to appoint for a period up to three years qualified merchant bankers for advising it, to disinvest a part of the paid up equity share capital in each of the public sector companies, through the ‘Offer for Sale’ of shares by promoters.
The 10 companies have been divided into two baskets. DoD had earlier this month issued two RFPs for selecting merchant bankers. The ones selected will handle five disinvestments at one go, the divestment department said while inviting proposals from bankers. It would appoint four merchant bankers for each basket and merchant bankers have to submit their bids by July 24.
While applying for the job, the merchant bankers have to certify that they are not advising or acting on behalf of any other person or entity, which is engaged in the same line of business as that of each of the company constituting the basket, in respect of any transaction of same nature.
Further, they would also have to certify that they would ‘keep the Government/CPSE informed of any mandate/contracts entered into, to advise or act on behalf of or associate ourselves with, any other person or entity, which is engaged in the same line of business in respect of each company constituting the basket being disinvested...”
At the current market prices, stake sale in PSUs in basket 1 could fetch Rs 9,892 crore. This would include OIL, which could garner Rs 2,659 crore, Concor (Rs 1,793 crore), NMDC (Rs 4,505 crore), MMTC (Rs 720 crore) and ITDC (Rs 215 crore).
As regards basket 2, at current market prices it could be valued at Rs 9,679 crore. This would include NTPC (Rs 5,571 crore), Nalco (Rs 1,006 crore), BEL (Rs 1,458 crore), EIL (Rs 792 crore) and HCL (Rs 852 crore).
For the current fiscal, the government has set a target of raising Rs 69,500 crore through disinvestment. Of this, Rs 41,000 crore is to come from minority stake sale in public sector units and Rs 28,500 crore from strategic stake sale.
With four months into the fiscal, the divestment department has been able to divest stake in only one public sector unit, REC, due to volatile market conditions.