New Delhi: The government wants to price issues of public sector enterprises in a way that allows ordinary investors to own shares in the firms, disinvestment secretary Sumit Bose said in an interview. The government is hoping to raise Rs40,000 crore from its divestment programme in the next fiscal. Edited excerpts:
Stake sale: Disinvestment secretary Sumit Bose.
The finance ministry has called your target conservative, while some others consider it a little too ambitious. How confident are you of achieving it?
The finance minister, in his Budget speech, talked about four things. A) He talked about broadbasing of ownership in PSUs (public sector units). B) He talked about how this would improve the corporate governance, this process. C) He talked about how unlocking of value benefits all the stake holders—the government, the company and the investors. D) He talked about using these proceeds, i.e. this Rs40,000 crore, to invest in capital expenditure in social sector schemes to create new assets. Some assets sold, some assets created...
Within that, Rs40,000 crore is an estimate; it is given as part of the non-debt capital receipts of the government. The Budget figures are arrived at after (a) great deal of deliberations.
So this is a figure and, certainly, this department would strive to achieve it.
Does your figure include the NMDC (National Mineral Development Corp. Ltd) follow-on public offer (FPO), likely to happen in March?
NMDC is for the current fiscal... The Rs40,000 figure is an estimate for the next fiscal. There the Budget documents don’t give any names of PSUs (to be divested in 2010-11)...
Will you offer a discount to retail investors over institutional investors in the NMDC offer?
Yes, 5% discount to retail has been mentioned in the red herring prospectus, which has been filed.
We are using the book-building method, so that definitely is on the cards.
You talked about broadbasing ownership. Doesn’t the lukewarm retail participation in the disinvestment programme worry you?
I would reiterate government’s policy about people’s ownership and, hence, the importance of retail.
Whether in every issue retail does as well as what it has done in the past, a lot of things determine that...
(The) government will always endeavour to have make their pricing fair and reasonable.
There is a process by which this is done; there is a high-powered committee; there is an empowered group of ministers. Through them, the government ensures that the pricing, which is offered on these issues, is fair and reasonable to everyone.