New Delhi: The Indian government is actively pursuing disinvestment in the unlisted central public sector enterprises (CPSEs) and has sought help from the financial advisers on their boards to get these firms listed on the bourses, even as the companies are not keen to tap capital markets in view of the prevailing market conditions.
"Financial advisers are requested to advise the CPSEs that, consequent to listing, such companies would be better able to tap the capital market for capital expenditure requirements instead of depending on government finances," a May 11 letter of the Department of Expenditure, posted on the Ministry of Finance's site, to financial advisers showed.
The department attached a letter from the Additional Secretary of Department of Disinvestment, Sidhartha Pradhan, which noted the benefits of listing these entities on stock exchanges.
The listing of the companies will improve corporate governance, develop and deepen capital markets by spreading the equity culture and unlock value for shareholders, Pradhan said in the letter.
Due to the stock markets experiencing turbulence, the government has budgeted to raise Rs 300 billion in the current financial year 2012-13 by selling stakes in the state-run companies.
The government had budgeted a divestment target at Rs 400 billion for the fiscal 2011-12, but failed miserably to meet it due to week markets conditions and policy inaction led to deferment of stake sale in many of the companies lined-up for disinvestment.
Earlier Wednesday, Minister for Heavy Industries and Public Enterprises Praful Patel said that the current market conditions are not conducive for disinvestment in state-run firms.
"The stock market sentiment is being not what it is. I think there is a slowdown in the disinvestment process. As and when the market sentiment improves, more and more PSUs will be offered for a partial disinvestment," he told reporters.
Rashtriya Ispat Nigam Ltd will be the first state-run firm in current fiscal to get listed and the company is expected to file the draft red herring prospectus for the initial public offer (IPO) to sell 10% stake soon.
Steel Authority of India Ltd, Bharat Heavy Electricals Ltd, Hindustan Copper Ltd, Oil India Ltd, and Hindustan Aeronautics Ltd are among the other CPSEs on the government radar for divestment of its stake in this fiscal.