India lines up stake sales in seven state-run firms by March 31
BY PRASANTA SAHU
NEW DELHI--India's federal government has decided to sell stakes in seven state-run companies by the end of March -- starting with oil explorer Oil India -- as it ramps up efforts to meet its target of raising 300 billion rupees ($5.5 billion) through the exercise, a senior finance ministry official said.
New Delhi plans to sell 10% in Oil India later this month, 9.5% in power producer NTPC in the first half of February, and 12.15% in National Aluminium Co., or Nalco, in the second half of the month, Disinvestment Secretary D.K. Mittal told The Wall Street Journal recently.
The disinvestment department co-ordinates stake sales in state-run companies.
Mr. Mittal added that there will be four stake sales -- one every week -- in March.
The government is planning to tap into a resurgence in market sentiment after a volatile 2012 which forced New Delhi to cancel or put off some stake sales. The government has managed to raise only 69 billion rupees through three stake sales so far in the fiscal year.
The companies in the stake-sale program include Steel Authority of India, where the federal cabinet has cleared a sale of a 10.82% stake. Other sales will include 12.5% of Rashtriya Chemicals & Fertilizers, 9.33% of MMTC and 10% of Engineers India.
"We have planned [to raise] 300 billion rupees to 350 billion rupees from stake sales this fiscal year," he said.
The share-sale program is to funding India's large subsidy costs on food, fuel and fertilizers. But the sale program's slow progress has raised concerns on how the government will meet its revenue target at a time when tax revenue is weak due to a slowing economy.
This has also led to doubts on India managing to stick to its aim of keeping its budget deficit to 5.3% of gross domestic product, compared with 5.75% a year earlier.
Government officials though have so far stuck to the fiscal deficit target.
The government plans to sell its stakes through auctions on stock exchanges. The process allows founders to sell stakes through stock exchanges instead of conducting a full public offering, saving on paperwork and time.
Dow Jones Newswires