New Delhi: Swadeshi Jagran Manch (SJM), a group that claims affiliation to the Rashtriya Swayamsevak Sangh (RSS), on Thursday raised objection to the proposed sale of government stake in ITC Ltd and Larsen and Toubro Ltd (L&T) held through the Specified Undertaking of the Unit Trust of India (SUUTI).
In a letter to Prime Minister Narendra Modi, SJM said the government’s proposed move would send wrong signals to investors.
“If carried forward, this decision will have far reaching consequences that go beyond normal disinvestment criterion. Recognising the strengths of ITC and L&T, certain vested interests are constantly trying to destabilise and inducing disinvestment in these national champions enabling BAT (British American Tobacco) and other foreign entities to take control of these companies,” SJM national co-convener Ashwani Mahajan told PTI.
“Humbly we wish to state that at present there is an atmosphere of hope generated by your able leadership about future growth prospects in the economy. Such a decision to offload shares of premier companies would send wrong signals to the investors that government itself does seem to be confident of its growth story,” Mahajan said in the letter.
“... in national interest, no steps should be taken to jeopardise the stability and long term prospects of these companies. On the contrary the management of the organisations should be encouraged to be the flag bearers of India in the world,” he said.
Mahajan said ITC and L&T are India’s national champions and are in the process of building brands and capabilities for the future, which match international quality and standards. He said these firms, while leveraging their intellectual capital and capabilities, are poised to become international players and will be valuable foreign exchange earners through royalties and technical fees.
“This decision of the government has perturbed all the nationalists... Even a slight change in the holding pattern of shares of these companies would lead to a destabilisation in management or even shift of management to foreign entities,” the SJM said.
Mahajan said past experience clearly shows that with the change in management from Indian to foreign nationals or other entities, the entire nature, working and objectives of the companies change altogether.
“The thrust shifts to maximising profits by increasing import intensity that increases outflow of money, directly affecting the country’s forex reserves,” he said.
The government is planning to sell its stake, held through special purpose vehicle SUUTI, in conglomerate ITC, engineering major L&T and Axis Bank Ltd. The centre holds 11.53% in Axis Bank, 11.17% in ITC and 8.16% in L&T.
A complete stake sale in these three companies could fetch over Rs60,000 crore to the exchequer. The RSS-affiliate had earlier too criticized some economic policies, including the new foreign direct investment rules.
The SJM said that according to media reports the government has gone ahead and appointed merchant bankers to divest minority stakes held in listed and unlisted companies held by SUUTI.
Mahajan said while in ITC, “domestic institutions hold 32% shares and BAT’s group companies (foreign entity) hold 29.99%”. He said “in case government sells its SUUTI holdings of ITC shares, even to general public, BAT would become the dominant shareholder and the company will go into the hands of foreign management, and for all practical purposes, become a foreign company, which at present is an Indian company with an Indian soul”.
On L&T, he said, “Offloading of SUUTI shares to any player, or acquisition of these shares, along with shares held by general public, the present management would be destabilised.” Other parties hold 21.52% share, even as general public holding is 24.40% in L&T.