‘Selling the family silver’ may be a metaphor applicable to the government’s plans of raising . 55,814 crore through divestments to reduce government borrowings but even that silver is going cheap.
A sharp fall in valuations od stateowned companies and steadily deteriorating market sentiment are bound to make the government sell more volumes to make the same revenues.
The BSE PSU index, which gauges the performance of 60 listed PSUs, has already lost nearly 22% in the first four months of the current fiscal. Some of these companies have lost up to 50-60% of their worth.
The government has so far in August ’13 mopped up . 395 crore through stake sales in Neyveli Lignite, India Tourism Development Corporation and State Trading Corporation.
This is in addition to . 901 crore raised by selling stakes in Hindustan Copper, MMTC and National Fertilisers in July. It still needs . 54,518 crore to meet its target for the year.
The total market capitalisation of all PSUs — where the central government directly holds stake — is around Rs 944,000 crore of which the government’s stake is worth . 7,05,000 crore. Assuming the government were to lower its stake to 51% in all these companies it is still possible to raise . 2,24,000 crore.
The government kept a steep target
this year as it could mop up only . 23,830 crore from divestments compared to original target of . 30,000 crore in the last fiscal.
The list of companies likely to hit the market is long but the government has already been dealt a blow when it scrapped plans to sell stake in Bhel due to plunging valuations.
The government wants to sell stake in IOC but here again, falling valuation, due to the rupee, is likely to spoil the government’s plans. Besides, there could be a few unlisted companies coming with IPOs. The market is surely not going to encourage any of these moves presently.
A sharp fall in valuations od stateowned companies and steadily deteriorating market sentiment are bound to make the government sell more volumes to make the same revenues.
The BSE PSU index, which gauges the performance of 60 listed PSUs, has already lost nearly 22% in the first four months of the current fiscal. Some of these companies have lost up to 50-60% of their worth.
The government has so far in August ’13 mopped up . 395 crore through stake sales in Neyveli Lignite, India Tourism Development Corporation and State Trading Corporation.
This is in addition to . 901 crore raised by selling stakes in Hindustan Copper, MMTC and National Fertilisers in July. It still needs . 54,518 crore to meet its target for the year.
The total market capitalisation of all PSUs — where the central government directly holds stake — is around Rs 944,000 crore of which the government’s stake is worth . 7,05,000 crore. Assuming the government were to lower its stake to 51% in all these companies it is still possible to raise . 2,24,000 crore.
The government kept a steep target
this year as it could mop up only . 23,830 crore from divestments compared to original target of . 30,000 crore in the last fiscal.
The list of companies likely to hit the market is long but the government has already been dealt a blow when it scrapped plans to sell stake in Bhel due to plunging valuations.
The government wants to sell stake in IOC but here again, falling valuation, due to the rupee, is likely to spoil the government’s plans. Besides, there could be a few unlisted companies coming with IPOs. The market is surely not going to encourage any of these moves presently.
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