More than Rs 25,000 cr from disinvestment this year
Disinvestment proceeds of the government could be higher than the estimate of Rs 25,000 crore for 2009-10. The government has already raised Rs 13,621 crore through disinvestment in four public sector companies.
Dilution of stake in National Mineral Development Corporation (NMDC), the fifth public sector undertaking to come out with a public offer this year, is likely to fetch the government more than the remaining Rs 11,388 crore, thereby exceeding even the revised target for the current year.
Even if the issue price for NMDC is set at Rs 405 a share (a discount of 7 per cent at the current market price), the issue would be able to raise Rs 13,365 crore, which is slightly less than Rs 13,621 crore raised through the other four issues this year.
The original budgetary target for disinvestment was Rs 1,120 crore for 2009-10. A senior official in the Department of Disinvestment said the government earned Rs 882.51 crore from Rural Electrification Corporation (REC) issue and Rs 8,480 crore from National Thermal Power Corporation (NTPC) follow-on offer. ?The figures for the two companies have been finalised after issue of shares,? said the official.
The government raised Rs 2,012 crore through dilution of equity in National Hydro Power Corporation (NHPC) and Rs 2,247 crore from stake sale in Oil India Ltd (OIL). Besides, it got interest income of Rs 5.25 crore from NTPC issue and Rs 1.25 crore from REC.
The NMDC follow-on offer will open on March 10. The issue price will be decided by an Empowered Group of Ministers (eGoM) on March 8. The issue will hit the market with over 33 crore equity shares of face value Re 1 each. The money will be raised through a book building process.
NMDC?s stock closed 0.32 per cent higher at 435.15 at the Bombay Stock Exchange on Thursday. At the prevailing market price, the issue should be able to fetch Rs 14,360 crore, though the price band will be at a discount to the market price. The amount raised by the government would depend on the price band and the final issue price. Like the earlier issues of NTPC and REC, the finance ministry will share the interest income with bankers to the issue.
?Though the interest income is not strictly a disinvestment proceed, it will flow into the National Investment Fund, the corpus that holds money from the government stake sale, under a miscellaneous head,? said an official. With the addition of interest income, the government?s disinvestment proceeds this year may go up marginally.
For 2010-11, the government has set a much higher disinvestment target of Rs 40,000 crore. Coal India, Bharat Sanchar Nigam Ltd, Steel Authority of India Ltd and Engineers India Ltd are expected to come up with their public offers next year. Satluj Jal Vidyut Nigam Ltd, earlier scheduled for disinvestment in the current fiscal, will now hit the market in 2010-11.