New Delhi: The Disinvestment Department and SCOPE, the public sector enterprises apex body, have different takes on the government proposal to dilute its stake in as many as 60 CPSUs as whether flooding the market with so many IPOs would dampen the market sentiment or not.
While the SCOPE is against flooding the market with so
many IPOs, Disinvestment Secretary Sunil Mitra said any such
stake sale would only strengthen the market.
"The market should not be flooded with offerings from PSEs as it may dilute the value of stocks," SCOPE Chairman Arup Roy Choudhury said here.
However, when asked whether too many stake sale in PSUs would dampen the market sentiment, Mitra replied in the negative.
"Release of good quality PSU paper provide greater liquidity and depth in the market. These PSUs are all quality PSUs. They are strong companies, and have good financial depth...these companies, in my view would be valuable... It will strengthen the market, liquidity depth and its stability," he said.
There are around 60 profit-making CPSUs in which the government wants to dilute its stakes through IPOs or follow-on offers. But there is no certainty whether these firms would be disinvested at all or not and the time-frame of stake sale.
However, three PSUs--NTPC, REC and Satluj Jal Vidyut
Nigam--have already been cleared by the government for selloff
and are expected to come out with public offers this fiscal,
Mitra said.
However, this would depend on market conditions, Mitra
added. "The objective of the government will be to maximise
the returns that we can get from each issue so that each issue
is successful, but if the market conditions don't hold in rest
of this financial year then obviously we will have to take a
view on whether we will do this year or do it later," he said.
The listing of PSUs also enhances their performance,
Mitra said, adding the post-listing performance of PSUs is
beneficial to investors, employees and the government.
Mitra also said the value of government’s residual
holdings in PSUs increases substantially. To buttress his
point, he said the government is expected to raise more than
Rs 8,100 crore from the proposed sale of five percent equity
in NTPC, over three times of the money raised by
selling 5.25 percent of equity in 2004.
He said his Department is in talks with the
administrative ministries of around 60 companies eligible for
divestment and specifically named SAIL, NMDC, BSNL and Coal
India where the Department is in talks with respective
ministries.
The government has recently decided that all listed
profitable companies should increase their public holdings to
at least 10 percent and all profitable unlisted companies
should go public.
Mitra said, according to a survey by the Department of Public Sector Enterprises there are 10 profitable listed companies where public holding is less than 10 per cent and 50 CPSUs which are profitable but unlisted during 2007-08.
Bureau Report
First Published: Sunday, November 15, 2009, 12:53