10 January 2001

Government likely to offload PSU stake to FIs
New Delhi: The Department of disinvestment is reported to be working on a new to allow offloading of government stake in blue chip public sector units to financial institutions (FIs). The proposed scheme would be a slightly revised version of the original plan earlier mooted by former finance secretary Mr. Vijay Kelkar.

Under the proposed plan, the FIs can take a decision on whether to buy government stake or not on a case-to-case basis. Some of the FIs, which are expected to acquire government stake, include Unit Trust of India, State Bank of India, Industrial Development Bank of India and Infrastructure Development Finance Corporation.

FIs had prepared a report, in which they had identified more than half a dozen blue chip companies in which they were interested in picking up stake.

Once the modalities are finalised, the DoD is expected to approach the cabinet committee on disinvestment with firm proposals on about half a dozen PSUs, including Videsh Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. The government would however, in most cases retain the 26 per cent stake required to maintain the management control. Presently, disinvestment by the usual route of bidding takes a minimum of 12 to 18 months, making it difficult to meet the target of Rs 10,000 crore this fiscal. Of the 33 companies on which the DoD has started working, no company has yet been sold.

9 January 2001