Government proposes disinvestment in two PSUs

The government is understood to be contemplating a move to partially divest its stake in public sector unit NMDC (National Mineral Development Corporation) and an unlisted entity MOIL (Manganese Ore India). While the former is a navratna company, the latter is classified as mini-ratna.

The proposal has come from the ministry of steel, which has suggested 10-20% stake sale in NMDC that earned a net profit of Rs 4,350 crore in 2008-09. Similarly, it is contemplating about 10% stake sale in the MOIL through the initial public offer (IPO). The company earned a net profit of Rs 695 crore in the last fiscal.

Currently, only about 1.46% of equity of NMDC is held by the public and the balance 98.5% is still held by the government. Accordingly, the market capitalisation of the company is around Rs 1,20,000 crore. In this wake, if the government goes for a 20% stake, coupled with disinvestment of Moil, the government’s target of Rs 25,000 crore (given in the Economic Survey) can be achieved from these two companies alone.

Although the government is also looking to list the telecom sector giant BSNL, the plan is facing stiff opposition from trade unions and therefore may take some more time to materialise. The government has as a policy announced earlier that it will look to raise revenue through disinvesting stake in public companies to support its infrastructure development initiative.

However, in the Union Budget for FY2009-10, the finance ministry had put the total disinvestment proceeds for the fiscal at a meagre figure of Rs 1,120 crore. Finance minister Pranab Mukherjee later clarified that the government had all the intention to go ahead with the disinvestment agenda but there was no need to give its details in the budget document.