Strategic sale of five PSUs likely in FY19

The Department of Investment and Public Asset Management has examined 30 strategic sale candidates and earmarked five — HSCC, Engineering Projects India, Pawan Hans, Scooters India and Central Electronics — which it is confident of selling in 2018-19. The move comes after the Centre failed to find a single bidder for Air India. Arup Roychoudhury writes

The Department of Investment and Public Asset Management (Dipam) has carefully examined 30 strategic sale candidates and earmarked five — HSCC, Engineering Projects India, Pawan Hans, Scooters India and Central Electronics — which it is confident of selling in 2018-19. The move comes after the government failed to find a single bidder for Air India, threatening to derail the ~800 billion disinvestment target for the current financial year.

Of the five, HSCC and EPIL are earmarked for sale to larger ‘similarly placed PSUs’ and will likely be acquired by stateowned construction major NBCC. On the other hand, Pawan Hans, Scooters India and CEL will be sold to private players. Top officials told Business Standard that they had seen a good response in the expression of interest (EOI) stage.

“We are fairly confident of being able to sell these five PSUs this fiscal year itself. Our focus is on getting good private sector suitors for companies earmarked for privatisation,” said a top official. The official said the Centre’s plan to merge three unlisted general insurers — National Insurance, Oriental Insurance, and United India Insurance — and then list the merged entity on the stock exchanges had been put on the back burner.

“Merging itself will take more than a year. The listing will only happen after that and will take more time,” the person said.

As reported earlier, along with the Centre’s 51 per cent stake in Pawan Hans, Dipam is planning to put the entire helicopter firm on sale by offering the remaining 49 per cent stake of ONGC as well.

So far in 2018-19, the Centre has earned ~9.2 billion from disinvestment. This includes a follow-ontranche

of the Bharat 22 ETF, and initial public offerings of rail company RITES and defence company MIDHANI. Dipam plans further tranches of Bharat 22 and its first CPSE ETF.

Apart from strategic sales, a number of IPOs, including IRFC Ltd, IRCON, RVNL, Mazagon Dock Shipbuilders, Garden Reach Shipbuilders, NEEPCO, and MSTC, are lined up. Offers for sale (OFS) for a number of listed PSUs are also lined up, along with cashrich companies required to buy back shares.

Apart from the five privatisation candidates listed above, the government continues to struggle with roughly 24 other companies, subsidiaries and standalone assets for which Prime Minister Narendra Modi’s Cabinet has given approval for ‘strategic disinvestment’.

Most of the plans are stuck at the preliminary information memorandum and expression of interest stage.