Stock market rally: Preparations for stake sale of five PSUs

MUMBAI: Taking advantage of the current rally in the stock market, the government is mulling to sell its stake in several public sector undertakings. Taking advantage of the boom, the government intends to achieve the disinvestments target for the current financial year, informed sources said.

The government is considering selling its stake in Coal India, Hindustan Zinc and Rashtriya Chemicals and Fertilizers (RCF). Expression of interest for divestment of Container Corporation of India may be approved soon.

Through the offer-for-sale mechanism, the government is considering selling five to ten percent of its stake in five undertakings, including Rashtriya Chemicals and Fertilizers, Hindustan Zinc and Coal India.

The government expects to raise Rs 16,500 crore through this sale. The funds will be used to offset the increase in the subsidy bill due to the Russia-Ukraine war. The government plans to raise Rs 65,000 crore through disinvestments in the current financial year, but so far only 38 to 40 percent of the amount has been raised. A major part of which is the sale of shares in LIC.

According to a Bloomberg report, the central government may increase its revenue by selling some stake in these state-owned companies in the final quarter of the current financial year. As the stock market hits all-time high levels, the government is also considering selling stakes to book profits.

According to the report, the government may sell some of its stake in these companies through an offer for sale. The government is going to sell stakes in Coal India, NTPC, Hindustan Zinc and RITS as part of its disinvestment plan. The government can sell this stake in the next 4 months.

If the government sells even 5% of its shares at the current value, $2 billion i.e. approximately Rs. 16,500 crore can be collected. According to earlier reports, the government has received Cabinet approval to sell stake in Hindustan Zinc.

In 2002, the government sold 26% of its maximum stake in Hindustan Zinc to Anil Agarwal's Vedanta Group. Mining giant Vedanta has since gradually bought more stakes in Hindustan Zinc and now the total stake held by Vedanta has increased to 64.92%.

The government has conducted two road-shows with Concor's Proteel Investors. Based on the feedback received by the government after this road show, the government has prepared a draft expression of interest. The government owns 54.8 per cent stake in Concor, of which it wants to sell 30.8 per cent stake.

The draft is likely to be approved in this meeting of the officials of Finance Ministry, Ministry of Railways, Concor. Further process will be completed after getting approval in this committee meeting. And it is likely that an expression of interest will be released next month.