Meeting the FY23 divestment aim of Rs 50,000 crore is likely to be a challenge for the government. With just a month to go for the financial year to close, the divestment kitty currently stands at just over Rs 31,000 crore.
The government had pinned hopes on the Hindustan Zinc Ltd's (HZL) partial share sale by March-end, to shore up its divestment mop up. As a government official put it, “We had worked very hard on the issue but now there is a spanner in the works.”
The ongoing government opposition to Vedanta using HZL’s balance sheet to buy the groups international zinc assets has scuttled the Centre's plans for a 10 percent offer for sale (OFS) of HZL. At the current market valuations, it would have garnered Rs 3,800 to 4,000 crore for the government.
However, the Centre has 2-3 other offer for sales in mind, the much talked about Coal India could be one of them, before March end. The March OFS plan doesn’t include ITC —“there is nothing in the near horizon,” an official said.
Strategic sales slowing down
In terms of the strategic stake sale agenda also, most of it is likely to unfold in the next financial year, although the Centre is trying to invite the expressions of interest (EoI) for CONCOR by March.
“There are some land issues which are currently under discussion with Railways, we are still hopeful of taking approvals for the EoI in March”
Strategic sales of Container Corporation of India Ltd (CONCOR), Bharat Earth Movers Ltd (BEML), Shipping Corporation of India (SCI) are slated for the next fiscal now.
After the demerger, the BEML land assets listing is still awaited. It is similar for the SCI as well, now that the demerger approval is formal. This process is likely to take a few months, financial bids for both transactions will be called only after that.
The government’s strategic sales have been plagued by land issues, greatly slowing down the pace of disinvestment as investors have been seeking clarity on these non-core assets which are not part of the sale.
The government is also working on selling the Air India subsidiaries, Air India Engineering Services Ltd (AIESL) and Air India Airport Services Ltd (AIASL), with plans to invite EoIs soon.
As of now, IDBI Bank is the likely candidate where the government’s strategic sale could get completed in FY24. Due diligence for IDBI sale is currently on and the government could invite financial bids by April or May.
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