Govt. Rs 30,000Cr disinvestment starts with Hindustan Copper
ick-starting the disinvestment process of this year, the government has sold 5.58 per cent stake in Hindustan Copper for about Rs 808 crore at an average price of Rs 156.56 a piece. However, a clutch of state-run banks and insurer, LIC, had to pitch in to save the day for the government. But, that did not deter the Finance Minister P Chidambaram to feel encouraged. Enthused by the response to the first stake sale in the current financial year, he expressed the hope that the government would be able to garner the targeted Rs 30,000 crore in 2012-13 through disinvestment. The government had planned to dilute its stake by 4 per cent in the copper major through offer-for-sale route, with an option of selling an additional 5.9 per cent and set the floor price at Rs 155 a share. However, the issue received bids for 5,16,11,858 shares, representing 5.58 per cent stake in the company, at an average price of Rs 156.56 per share. “The approximate gross receipts from the issue amount to Rs 800 crore,” said an official release. After share sale, government’s equity in Hindustan Copper has come down to about 94 per cent. Bulk of the equity, according to market sources, was picked up by Life Insurance Corporation (LIC) and State Bank of India (SBI) as the initial response from the investors was lukewarm. The share sale took place on separate windows of stock exchanges -- BSE and NSE. The issue continued to get subdued response in the bourses with bids worth Rs 31.40 crore received in the first three hours as against an overall target of up to Rs 1,376 crore. The offer for sale of Hindustan Copper shares, which started at 9.15 am, had received total bids for 20,25,835 shares or 2.28 per cent of the total offer, which are worth Rs 31.40 crore at the floor price of Rs 155 per share, till 13.15 pm. Disinvestment Secretary Haleem Khan said institutional investors participated in the issue, but did not give further details. “We went to the market with 4 per cent and got bid for 5.58 per cent. I don’t think it can be considered as failure. I think I should be considered as good success keeping in view the market conditions...(and) shares are illiquid,” Khan said. “A total bid for 5,16,11,858 shares was received. It has been decided to accept the entire number of shares bid for at or above the floor price. Thus, approximately 5.58 per cent of the total paid up share capital of HCL stands divested through this issue,” he added. Shares of Hindustan Copper, however, tanked 20 per cent to hit its lower circuit limit on BSE. Following the slump in the share price, market capitalisation of the company shrunk by a whopping Rs 4,925 crore to Rs 19,711 crore. The Hindustan Copper issue was very crucial for the government as it sets the tone for the government’s disinvestment programme of Rs 30,000 crore which it aims to complete in less than five months of the current financial year. The disinvestment process is important for the government to meet its 5.3 per cent fiscal deficit target, particularly in the face of growing trade deficits. Chidambaram said, “We will go forward with the disinvestment processes as approved by the CCEA between now and March...I hope that we can collect the targeted Rs 30,000 crore.” Khan said disinvestment of 10 per cent stake in NMDC was likely to take place in first half of the next month. “NMDC disinvestment should be in the first fortnight of December... They have estimated about Rs 7,000 crore. Let’s see,” Khan said. The government has listed out a number of state-run firms for the disinvestment process for the current fiscal which includes NMDC, OIL India, Nalco, NTPC and a clutch of others.