Government pushes strategic PSU sales, 4 companies may net Rs 49,000 crore

(This story originally appeared in on Oct 21, 2020)

NEW DELHI: The department of investment and public asset management (Dipam) is ready to push ahead with the strategic sale of several public sector companies with bids and expressions of interest (EoIs) for oil marketing company BPCL, Shipping Corporation, Concor and BEML planned next month. These four companies can help the government realise close to Rs 49,000 crore, based on current market value of their shares.

In the case of Air India, one of the most keenly watched disinvestment deals, a ministerial panel headed by the home minister is expected to clear the process this month, paving the way for calling expressions of interest around mid-December. But the transaction is only expected to be closed during the first quarter of the next financial year. “The entire process will gain momentum in the coming days,” said a gover nment source.

Officials told TOI that Dipam has spent the last few months clearing policy roadblocks for a smooth passage of the process. For instance, in the case of Concor, it has finally got the railways to rework the land licence policy to ensure that there is a levelplaying field for all container transport companies and it leads to overall development of the logistics sector.

The BPCL disinvestment, which is key to achieving the Rs 1.2-lakh-crore target for the year, is expected to get moving now as oil prices have improved and the PSU is not carrying inventory acquired at higher cost. Besides, there is significant buyer interest in the company as is also the case with Air India.

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Similarly, as reported first by TOI last week, the government has cleared apprehensions that some of the bidders and the transaction advisers had related to the Air India sale process and decided on going with the principle of enterprise value, where the bidder will make an assessment based on the equity and the debt. “The government is keen that the transaction is completed as it will cost Rs 500 crore every month to keep the airline running. It has already sunk so much money into the airline and shutting it is not an option, given the massive debt and the employee base,” explained an officer.

In addition, some of the asset-monetisation moves — including two companies of SAIL, as well as the Neelachal Ispat strategic sale — have made significant progress, with the transactions expected to be closed soon. “The market will also have greater confidence once some of the deals are concluded,” said an official.



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