Government Stake To Fall Below 51 Percent

New Delhi: Government proposes to offload substantial portion of its stake in select blue chip companies this year to meet higher disinvestment target even though the exercise will bring down its holding below 51 per cent level, the minimum holding required for an entity to qualify as a central public sector enterprise (CPSE).

Officials in Department of Investment and Public Asset Management (DIPAM) said that market regulator SEBI is expected to soon issue policy guidelines on Differential Voting Rights (DVR) that will allow promoters to raise finds without dilution of control. Once these regulations are in place, government could consider divesting higher stake in CPSEs without losing control or changing the PSU character of an entity.

At present there are more than two dozen CPSEs that are widely held by the public with government stake of less than or close to 60 per cent. These include maharatna and navratna CPSEs like Engineers India Ltd (EIL-52%), Indian Oil Corporation (IOC-52.18%), Bharat Petroleum Corporation (BPCL-53.29), Gail India (52.64%), Oil and Natural Gas Corporation (ONGC-64.25%), Power Finance Corporation (PFC-59.05%), Powergrid Corporation (PGCIL-55.37%), NTPC, Shipping Corporation of India (SCI-63.75%), Bharat Heavy Electricals (BHEL-63.17%), NBCC (68.18%), Container Corporation (Concor - 54.80%).

If government sells more of its equity in these entities it could raise its disinvestment proceeds easily from the market without looking at other instruments like share buyback, new issues of ETFs or higher dividend payout from PSUs including declaration of special dividend.

This would also eliminate pressure on achieving disinvestment target, as even a small issue by a bluechip PSUs can get better realisation for government shares. The shares of most of these companies have got good valuation from the market. Government has set disinvestment target of Rs 90,000 crore for FY20. (IANS)

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