New Delhi The government may fail to meet its asset-sales target again, as a combination of reasons, including poor market sentiment and legal challenges, has delayed the planned disinvestment of state-run companies.
The disinvestment of Shipping Corporation of India, BEML Ltd., NMDC Ltd.’s Nagarnar plant, Central Electronics Ltd. (CEL), Pawan Hans, and Concor has either been delayed or put on hold, people aware of the developments said. challenges were faced in doing so. Ongoing strategic sales were also delaying those in the pipeline.
“Even after the completion of the disinvestment process, legal issues have come to the fore in the cases of CEL and Pawan Hans, but the transactions have been stopped,” a senior official said on the condition of anonymity.
The government is yet to decide whether it will reconsider the entire transaction process of CEL, where the allegations made by the employees’ union of public sector enterprises were being probed, which led to the letter of intent and leasing to the winning bidder Nandal Finance. Ltd. has been suspended. The company’s bid was approved 260 crore in November 2021.
A second official said sales of non-core assets in Shipping Corporation of India, BEML and NMDC’s Nagarnar steel plant were slow as companies would have to liquidate assets before the transaction can take place.
Mint reported last month that Shipping Corp’s Mumbai-headquartered shipping house, a training institute in Powai and some other assets would not be sold but would be transferred to the demerged Shipping Corp of India Land and Assets Ltd.
As part of its strategic disinvestment strategy, the government will transfer its entire 63.75% stake in Shipping Corporation to a private entity with management control.
“Only a handful of companies like HLL Lifecare and Projects & Development India are making progress,” the official said. Given that several companies have shown interest.
Queries sent to the spokespersons of the Department of Investment and Public Asset Management (DIPAM) and the Ministry of Finance remained unanswered till Sunday evening.
The government has set a target to increase 65,000 crore from disinvestment in the year till March 31. It has lined up over half a dozen companies for strategic sale including Ferro Scrap Nigam Ltd., Vizag Steel, IDBI Bank and HLL Lifecare, but so far, it has been able to raise 24,543.67 crores, through an initial public offering of Life Insurance Corporation of India, offer for sale of Oil and Natural Gas Corporation Limited and Paradip Phosphates Limited and buyback of shares of GAIL (India) Limited.
A senior finance ministry official said the government is planning to bring out the expression of interest (EoI) document for the sale of shares in IDBI Bank by next month after getting clarity on the structure and deal size from the Reserve Bank of India. proposed sale.
The government recently did a road show in America. Based on investor feedback, it will seek clarity on the size of the deal, the guidelines or conditions on the merger, the consortium structure and the glide path for the government to reduce its equity holding in the bank.
The sale of the government’s remaining 29.54 per cent stake in Hindustan Zinc Ltd may also help in meeting the disinvestment target. The market value of the stake is expected to be approx. 32,000 crores.