Strategic sales to help meet sell-off target
The Centre is planning privatisation, or strategic sale, of a number of stateowned companies and properties to help meet its budgeted target of ~800 billion for 2018-19.
Apart from the marquee brand, Air India, work is under way to sell stakes in Pawan Hans, Dredging Corp, HLL Lifecare and Indian Medicines Pharmaceutical Corporation Limited (IMPCL), among others, said the official. The government is also planning to exit five India Tourism Development Corporation (ITDC) hotels in the upcoming fiscal year, starting with properties in Ranchi and Jaipur. Apart from these, NBCC might also acquire Bridge and Roof Co.
The Department of Investment and Public Asset Management (Dipam) has issued a number of requests for proposal on its website regarding these companies. “We are also discussing sale of ITDC hotels with state governments, as they own the land on which these properties are built,” said the official.
Dipam would also issue additional tranches of its two public sector undertaking exchange-traded funds, including Bharat-22, to meet the steep disinvestment target.
The target for 2018-19 was lower than the Revised Estimate of ~1 trillion for 2017-18. Government officials have conceded that the record proceeds of this fiscal year — about ~110 billion higher than the combined numbers of 2015-16 and 2016-17 — might not be achievable again.
“A ~1-trillion year is unlikely to happen anytime soon again, as far as stake sales are concerned,” said the official. “That does not mean we go back to the years when ~200-250 billion a year was the norm. As long as there is a pipeline of assets to be sold, ~500-700 billion a year is realistic. It is in no way an easy target. But we have a robust pipeline of planned stake sales.”
Work is on for a number of planned
initial public offerings as well, including railway and defence companies such as Indian Railway Catering and Tourism Corporation, Rail Vikas Nigam Limited, Mazagon Docks, Garden Reach Shipbuilders and Mishra Dhatu Nigam Limited. After the merger of Oil and Natural Gas Corporation and Hindustan Petroleum Corporation, there would be further such mergers as well, said sources. The three government insurance companies — Oriental, National and United India — would be merged before an initial public offering.
“These three companies will be merged because they operate in similar areas. We believe that once they are combined, that will unlock greater value for investors, after the listing of the new entity is carried out ,” another official said.
In his Budget speech, Finance Minister Arun Jaitley had said: “The government has approved listing of 14 CPSEs (central public sector enterprises), including two insurance companies, on the stock exchanges. The government has also initiated the process of strategic disinvestment in 24 CPSEs. This includes strategic privatisation of Air India.”