‘Tough to meet even trimmed FY20 aim’: DIPAM

The disinvestment department is sceptical over the prospects of meeting even the scaled down target of a Rs 650-bn mop-up from stake sale in government companies in the current fiscal ending March, two officials from the Department of Investment and Public Asset Management said.

The government has so far garnered Rs 350 bn from disinvestment.

The department feels the target could be a tall ask, given that there are just 42 days left in the current financial year, and the global investment climate has turned cautious after the outbreak of the coronavirus disease.

Earlier this month, the finance minister, in her Budget speech, announced a cut in the disinvestment aim for this fiscal to Rs 650 bn from Rs 1.05 trln. The target for 2020-21 (Apr-Mar) has been pegged at Rs 2.10 trln.

"We are hopeful that NTPC Ltd will conclude the acquisition of the government's entire stake in North Eastern Electric Power Corp Ltd, and THDC India Ltd by March-end. However, the other transactions that are in the pipeline are either of very small value or will take more time to materialise," one of the officials said.

In January, state-owned power sector major NTPC's board gave its in-principle nod for acquisition of government's entire stake in NEEPCO and THDC India.

The official said the disinvestment department expects to garner close to 150-160 bln rupees from NTPC's proposed acquisition of NEEPCO and THDC.

In November, the Union Cabinet gave its in-principle nod to strategic disinvestment of Bharat Petroleum Corp Ltd, Container Corp of India Ltd, Shipping Corp of India Ltd.

However, none of them will fructify in the next few months, the official said.

Another senior official of the divestment department said the government plans to tender part of its equity in some public sector companies when they announce a share buyback.

Media reports recently said the government is likely to nudge Indian Oil Corp to buy back around 3% of its equity.

The disinvestment department recently announced plans to divest stake in Hindustan Aeronautics Ltd, Bharat Dynamics Ltd, and Garden Reach Shipbuilders & Engineers Ltd through an offer for sale in the secondary market.

The department is also facing difficulty in pushing through stake dilution proposals in certain public sector companies through offers for sale.

The government's disinvestment drive has taken a hit as many roadshows in two of the biggest financial centres--Hong Kong and Singapore--had to be cancelled or postponed due to the coronavirus outbreak.

The government also plans to soon launch initial public offerings of Indian Railway Finance Corp, which is expected to fetch only around 10 bln rupees.

Prospects of launching another tranche of exchange traded fund comprising public sector companies too are bleak as the government has reached the threshold of 51% in many PSUs, and will require Cabinet approval for any more stake sale.

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