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Budget likely to target Rs 70,000 cr from stake sales

The 2015-16 budget, to be presented on February 28, could target about Rs 65,000-70,000 crore from disinvestment, one of the highest ever.

This will include about Rs 45,000 expected from stake sale in state-owned companies, about Rs 15,000-20,000 from residual stake sale in Hindustan Zinc and Balco, and about Rs 5,000 from partial sale in the stake which the centre holds in private companies through SUUTI (Specified Undertaking of UTI), Business Standard has learnt from multiple sources.
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Officials say that such an ambitious target means that the Finance Ministry will have to kick-start the disinvestment process right from the May-June, something which it is ready for. The Rs 45,000 PSU disinvestment target could include 5-10% stake sale in ONGC, Indian Oil, BHEL, Nalco, Dredging Corp, Concor, PFC, REC, NMDC among others.

For the fiscal year 2014-15, Finance Minister Arun Jaitley had targeted Rs 43,425 crore just from PSU disinvestment. However, after Coal India and SAIL, which fetched Rs 22,557.63 crore and Rs 1,700 crore respectively, sources said that other stake sales were unlikely till March 31.

“While the department of disinvestment (DOD) has built a pipeline of small stake sales, including BHEL, NMDC, PFC, REC, the Finance Minister’s office has conveyed that so far, the fiscal maths seems comfortable,” said a senior government official.

“Before Coal India, there was panic. Now though, there is no pressure to do further disinvestment this fiscal. If the target for next year turns out to be that big, then it makes sense to sell these stakes from May-June,” the offical said. The person added, however, that the DOD may still sell some small stakes till March if North Block directs it to do so.

For 2014-15, the government had also planned to sell stake worth at least Rs 15,000 crore in Hindustan Zinc and Balco. It had hoped to raise about Rs 6,500 crore by selling part of its stake in Axis Bank, ITC, and Larsen & Toubro, through the Specified Undertaking of the Unit Trust of India.

In fact, the possible HZL-Balco residual sale seems under-calculated as even at current prices, selling of the centre’s 29% stake in listed Hindustan Zinc can easily fetch upwards of Rs 20,000 crore.

While HZL was scrapped due to a case in Supreme Court questioning the proposed sale, in case of Balco, which is unlisted, the valuers have not yet arrived at a valuation of the centre’s stake in it.

In case of SUUTI ETF, it was deemed too complicated. An HZL-Balco stake sale will be included in next year’s calculations, and so will a SUUTI stake sale, maybe just not through and exchange traded fund.

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