Finance ministry tells divestment department to hasten PSU stake sales

The finance ministry has reportedly asked its department of disinvestment (DoD) to complete the groundwork for selling part of its stakes in state-owned companies soon after the budget to take advantage of the bull phase in the Indian stock markets.

The government is expected to retain the disinvestment target of Rs36,925 crore proposed in the interim budget for 2014-15 by the previous UPA government when it presents the final budget next month.

The Bombay Stock Exchange's 30-share Sensex has gained 14.5 per cent in this financial year, with the PSU (public sector undertaking) index touching a 52-week high of 9,091.04 on 10 June.

"Current market conditions will offer good valuations for most PSUs. We will push for divestment of PSUs post-budget and we are doing due diligence for the same," a PTI report cited official sources as saying.

The disinvestment department has identified blue-chip companies including Coal India Ltd, which has a market capitalisation of Rs2,45,769.74 crore, and the Steel Authority of India (SAIL), currently valued at Rs40,082.34 crore, for stake sales in FY15.

The government will also go ahead with the long-pending sale of its residual stake in Hindustan Zinc and Balco, according to the PTI report.

Other companies that the DoD would look at for disinvestment include the National Hydropower Corp (NHPC) the, Rural Electrification Corp, and the Power Finance Corp.

While a 10-per cent stake sale in Coal India and SAIL is on the cards, the DoD proposes to sell 11.6 per cent stake in NHPC and 5 per cent each in REC and PFC.

The disinvestment plan for this financial year was discussed by the DoD and finance minister Arun Jaitley last week and the minister is believed to have asked the department to be ready with the stake-sale proposals.

The disinvestment target in the previous financial year was slashed by about 60 per cent to Rs. 16,027 crore from Rs. 40,000 crore in the revised estimates.

The government proposes to mobilise Rs15,000 crore by selling the residual stake in HZL and Balco.