As a result of the privatization of BPCL, the sale of the remaining portion of Hindustan Zinc Limited (HZL) could be the biggest deal for the government this year in terms of revenue potential, Tuhin Kant Pandey, Divisional Secretary Investment and Public Asset Management (DIPM), told FE.
“Arbitration lawsuits have been withdrawn and there is no pending issue with the government’s investment in HZL. It will go to the cabinet soon, ”Pandey said, adding that the Offer for Sale (OFS) route could be accepted for sale.
As per the order of the Supreme Court dated November 18, 2021, the Center may sell its remaining 29.54% in HZL in the open market as per SEBI rules. At current market value, the stock is valued at around Rs 36,600 crore.
The Center and Vedanta (the present promoter) have decided to conclude an arbitration on the second call option claimed by Vedanta in the case of sale of the remaining partnership.
At the top of the government’s disinvestment agenda will be the privatization of IDBI Bank and Container Corporation and the offloading of a portion of the indirectly held portion of the private sector ITC, Pandey said. In addition to trying to complete the sale of Shipping Corporation of India (SCI), the government may sell its shares held by Axis Bank through a specific undertaking of Unit Trust of India at an appropriate time this year, he added.
The LIC IPO has brought in Rs 20,516 crore to the government, much less than the target. The transaction was budgeted for last year, but the process has spread this year. Asked whether the target of raising Rs 65,000 crore would be achieved through investment this year, Pandey said: “Sometimes, despite the best efforts, transactions do not take place. BPCL is not being sold this year and that could be our highest revenue. ”
SUUTI’s 7.92% stake in ITC is currently valued at around Rs 27,300 crore and Axis Bank’s 1.55% stake is currently valued at Rs 3,200 crore.
Excluding LIC earnings, the Center has already raised Rs 3,059 crore from the sale of 1.5% stake in state-run Explorer ONGC.
In order to control the budget deficit, it is important for the government to collect receipts of non-debt capital through investment routes.
In FY23, the Center may have to spend an additional Rs 1.8 trillion on budget estimates on fertilizer and food subsidies, Finance Secretary TV Somanathan recently told FEA, adding that additional spending could be offset by a steep jump in net tax receipts and higher investment revenue. Somanathan said the government is hopeful of achieving a budget of over Rs 20,516 crore already raised through LIC IPO and Rs 65,000 crore through investment, which was not part of the budget estimate for this financial year.
A Cabinet note has been prepared for inter-ministerial consultation on Land Licensing Fee (LLF) for Railway Land Industrial Users, which will pave the way for strategic investment of State-run Container Corporation of India (Concour). “The cabinet will soon take up the LLF issue. After that, interest will be expressed for Concours, ”Pandey said. The Centre’s proposed 30.8% stake in the multi-model logistics company was worth around Rs 11,000 crore at current market value.
Financial bids for IDBI Bank (EoI) and SCI are likely to be invited soon. Currently, LIC (49.24%) and Sarkar (45.48%) together hold 94.78% stake in IDBI Bank. The Centre’s share price in IDBI Bank is around Rs 18,000 crore. The income from IDBI Bank will depend on how much it sells to the bank as LIC will also reduce the lender’s stake.
Deepam is currently hosting a pre-EoI roadshow to gauge investor interest, as well as seeking regulatory relaxation on compliance with post-acquisition stake reduction roadmap buyer rules.
The privatization of BPCL, which has been stalled for more than a year, has come to an end as potential investors have become more skeptical about the global change for green energy as well as the “lack of pricing freedom” with state-owned fuel retailers.
In November 2020, multiple bidders, including Vedanta, Apollo Global Management and Think Gas (iSquare Capital), showed interest in 52.98% of the government’s shares in BPCL, valued at around Rs 40,000 crore at current market prices.