: Flying start to CPSE privatisation #finance #StockMarketNEWS #Business Press Trust of India New Delhi After a hiatus of nearly two decades, the government’s programme to privatise state-owned

Posted in: #finance #StockMarketNEWS #Business

Flying start to CPSE privatisation #finance #StockMarketNEWS #Business
Press Trust of India

New Delhi

After a hiatus of nearly two decades, the government’s programme to privatise state-owned firms restarted with the handing over of debt-laden national carrier Air India to the Tata Group.

With the new owner shelling out Rs. 18,000 crore for the buyout of the ‘Maharaja’, this would be the highest-ever amount garnered through privatisation, and is even more than the cumulative sum mopped up through strategic sales from 1999-00 to 2003-04.

The government had in October last year inked the share purchase agreement with the Tata Group for sale of national carrier Air India for Rs. 18,000 crore. Tatas would pay Rs 2,700 crore cash and take over Rs. 15,300 crore of the airline’s debt.

The government had garnered roughly over Rs 5,000 crore during that five-year period by privatising ten central public sector enterprises (CPSEs). Besides, three hotel properties of Hotel Corporation of India and 18 of ITDC were also sold off by way of slump sale.

Here is a timeline of strategic sale of CPSEs to private entities between 1999-00 to 2003-04: 1999-00 Modern Food Industries Ltd Rs 105 crore. In 2000-01, BALCO, Lagan Jute Machinery Co Ltd Rs 554 crore. In 2001-02, VSNL, Computer Maintenance Corporation (CMC), Hindustan Teleprinters Ltd (HTL), Paradeep Phosphate Ltd (PPL), some hotel properties of HCI and ITDC Rs 2,089 crore. In 2002-03, Hindustan Zinc Ltd (HZL), Indian Petrochemicals Corporation (IPCL), some ITDC hotel properties Rs 2,335 crore. In 2003-04, HZL (second tranche), Jessop & Co Rs 342 crore.

The government has also sold its majority stake in certain CPSEs to public sector companies operating in the same sector. This includes sale of 74% government stake in Indo Burma Petroleum Co (IBP) to Indian Oil Corp (IOC) in 2001-02 for Rs. 1,153 crore and Oil and Natural Gas Corp (ONGC) buying out government stake in Hindustan Petroleum Corp Ltd (HPCL) for Rs. 36,915 crore in 2018.

Besides, government’s 52. 63% stake in REC was sold to Power Finance Corp for Rs. 14,500 crore in 2018-19.

Between 2000-01 and 2019-20, the government sold its entire stake in nine CPSEs to other similarly placed public sector enterprises, garnering a cumulative Rs. 53,450 crore.

The privatisation process witnessed stagnation post 2004 as the focus shifted to selling minority stake in CPSEs through follow on public offer (FPO) and offer for sale (OFS) and also stock exchange listing of profitable CPSEs.

In the 2021-22 Budget, the government announced the PSE (public sector enterprises) privatisation policy as per which all PSUs will be privatised, barring those in four strategic sectors of atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services.