Government realizes ₹ 21,432.38 crore, by end-November 2016, through CPSEs’ disinvestment receipts, constituting around 59.53 % of the Budgeted Target of ₹ 36,000 crore ;

Government takes various steps to accelerate the disinvestment process including replacement of annual plan with rolling plans, Fast tracking of approval process and to make Disinvestment programme more inclusive by following an approach to reserve 20 per cent of shares on PSUs-OFS transactions for retail investors on a case to case basis. 

Year End Review - 2016

Dept. of Investment & Public Asset Management, Ministry of Finance

 

 

 

 

Following are the major reform measures, policy initiatives and achievements of the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance:

A.        Disinvestment Target  and Achievements during  2016-17

The disinvestment target for the Current Financial Year 2016-17 has been estimated at ₹ 56,500 crore comprising ₹ 36,000 crore from disinvestment of CPSEs and ₹ 20,500 crore from strategic disinvestment.

 During the current financial year 2016-17, the Government has so far realized ₹ 23528.73 crore, which include ₹ 21,432.38 crore through minority stake sale in 14 CPSEs and ₹ 2096.35 crore through strategic disinvestment. The total realization of ₹ 21,432.38 crore, by end-November 2016 through CPSEs’ disinvestment receipts, constitutes around 59.53 per cent of the Budgeted Target of ₹ 36,000 crore (CPSEs’ disinvestment).

B.        Reform Measures and Policy Initiatives:

(a)           Steps taken to accelerate the disinvestment process:

The Department has taken following measures to accelerate the disinvestment process:

(i)      Replacing annual plan with rolling plans.

(ii)     Creating a pipeline of proposals for CPSEs to take advantage of better market condition without any loss of time.

(iii)    Fast tracking of approval process.

(iv)    Disinvestment programme made more inclusive by following an approach to reserve 20 per cent of shares on PSUs-OFS transactions for retail investors on a case to case basis.

(v)     Based on the suggestion made by the Department, SEBI has reduced the notice period for an OFS transaction from T-2 to T-1 (T being the transaction day). This will help in minimizing the possibility of price hammering between the notice day and the transaction day and suitably protecting the interest of retail investors by providing them sufficient time to participate in the OFS transaction.

(b)              Restructuring and re-naming the Department to comprehensively manage the Government’s investment in PSUs as DIPAM

(i)            The Union Finance Minister has underlined the need for adopting a comprehensive approach to efficiently manage its investment in CPSEs as highlighted in Para 89 of his Budget Speech of 2016-17 as below:

“We will adopt a comprehensive approach for efficient management of Government investment in CPSEs by addressing issues such as capital restructuring, dividend, bonus shares, etc. The Department of Disinvestment is being re-named as the Department of Investment and Public Asset Management (DIPAM)”

(ii)         In the light of the announcement made, the Department has been  re-named as Department of Investment and Public Asset Management (DIPAM) which is in line with focus of the Government on management of its investment in Central Public Sector Enterprises (CPSEs) for accelerating economic development as well as augmenting the Government resources for higher expenditure. It also underlines the Government’s recognition of its investment in CPSEs as an important asset for accelerating economic growth and commitment to efficient use of its resources to achieve a better return on its investment in CPSEs.

(iii)       As announced in the Budget, guidelines on “Capital Restructuring of CPSEs” have also been issued by this Department on 27^th May, 2016. These guidelines supersede all previously issued guidelines by various Ministries/Departments from time to time and comprehensively deal with the inter-related issues on payment of dividend, buy back of shares, issue of bonus shares and splitting of shares. The focus of these guidelines is on optimum utilization of funds by CPSEs/Government to spur economic growth.

C.    The major achievements/highlights in respect of disinvestment of CPSEs are as under:

Details in this regard as follows:

(i)            NHPC OFS

CCEA in its meeting held on 10.09.2014 approved 11.36 per cent disinvestment in NHPC out of GoI shareholding of 85.96% per cent, through an OFS. The OFS took place on 27.04.2016 & 28.04.2016. The Government realised an amount of ₹ 2,716.55 crore.

(ii)          MOIL Buyback

The Alternative Mechanism in its meeting held on 07.06.2016 approved participation of Government in Buyback of shares by MOIL. The MOIL buyback offer opened on 19.09.2016 and closed on 30.09.2016. The Government realised an amount of ₹ 793.87 crore.

(iii)        NMDC Buyback

The Alternative Mechanism in its meeting held on 07.06.2016 approved participation of Government in Buyback of shares by NMDC. The NMDC buyback offer opened on 19.09.2016 and closed on 30.09.2016. The Government realised an amount of ₹ 7,519.15 crore.

(iv)        BEL Buyback

The Alternative Mechanism in its meeting held on 05.08.2016 approved participation of Government in Buyback of shares by BEL. The BEL buyback offer opened on 06.10.2016 and closed on 21.10.2016. The Government realised an amount of ₹ 1,802.60 crore.

(v)          NTPC Employee OFS –

NTPC Employee OFS was opened on 27.06.2016 and closed on 05.07.2016. The Government realised an amount of ₹ 203.78 crore.

(vi)        NHPC Employee OFS

NHPC Employee OFS was opened on 04.11.2016 and closed on 11.11.2016. The Government realised an amount of ₹ 21.27 crore.

(vii)      DCIL Employee OFS

DCIL Employee OFS was opened on 31.10.2016 and closed on 15.11.2016. The Government realised an amount of ₹ 0.93 crore.

(viii)        NALCO OFS

CCEA in its meeting held on 19/02/2015 approved disinvestment of 10 per cent paid up equity of National Aluminium Co. Ltd (NALCO) out of Government of India’s shareholding of 80.93 per cent through Offer for Sale (OFS).  The Legal Advisers and Merchant Bankers have been appointed and non deal road shows are being conducted.

(ix)          Buyback of shares by NALCO

Board of NALCO in its meeting held on 25^th May, 2016 recommended buyback of fully paid equity shares not exceeding 64,43,09,628 (of face value ₹ 5 each) at price of ₹ 44/- per share.  Government of India also participated in said buyback.  On this account, GoI received an amount of ₹ 2831.71 crore and its share holding came down to 74.57 per cent, from 80.93 per cent prior to buyback.

(x)           HCL OFS

CCEA in its meeting held on 13/05/2015 had approved disinvestment of 15 per cent paid-up equity of Hindustan Copper Ltd (HCL) out of Government of India’s shareholding of 89.95 per cent through Offer for Sale (OFS).  In first tranche, disinvestment of 7 per cent paid-up equity capital of HCL through OFS method was held on 29/09/2016 & 30/09/2016.  A total number of 6,47,65,260 equity shares were offered for sale at floor price of ₹ 62/- per share.  The issue was over-subscribed and GoI received an amount of ₹ 399.93 crores as disinvestment proceeds from the said transaction.

(xi)          Buyback of shares by CIL

The Board of Coal India Limited in its meeting held on 11^th July, 2016 recommended buyback of fully paid equity shares not exceeding 10,89,55,223 ( Face value ₹ 10) at ₹ 335/- per equity share.  GoI participated in said buyback.  On this

account, Government of India received an amount of ₹ 2638.24 crore.  Post buyback, the GoI shareholding in CIL has slightly increased to 79.78 per cent from 79.65 per cent prior to buyback.

(xii)      CONCOR Employees OFS

Government has received an amount of ₹ 9.34 crore on account of transfer of shares to the employees of CONCOR held in September, 2016 post OFS of the Company.

(xiii)     IOCL   Employees OFS

Government has received an amount of ₹ 262 crore on account of transfer of shares to the employees of IOCL held in May, 2016 post OFS of the Company.

(xiv)     NBCC OFS

OFS of 15 per cent Government of India shareholding in NBCC was launched on 20th October, and completed on 21st October, 2016. The OFS's sale proceeds was ₹ 2201.14 crore.

(xv)      Disinvestment of SUUTI holdings

1,48,23,702 shares of Larsen & Toubro Ltd (1.62 per cent of the equity capital of the company) was sold out of SUUTI's strategic shareholding by bulk trades on 4th November, 2016. Government received an amount of ₹ 2096,34,65,993/- from this sale. Strategic holding of SUUTI comprise shares of Axis Bank, ITC Ltd. and L&T shares.

D Strategic Disinvestment

Procedure and mechanism for strategic disinvestment of CPSEs was approved by CCEA in February, 2016. The CCEA Note seeking in-principle approval on First and Second tranche recommendations of NITI Aayog on strategic disinvestment of CPSEs, incorporating the recommendations of CGD, thereon has been approved by CCEA in its meeting held on 27th October, 2016. Action has been initiated on the process of strategic disinvestment of the CPSEs accordingly.

Disinvestment policy reforms expand market access and expedite stake sales while enhancing retail investor protection. The Government's disinvestment programme, managed by the Department of Investment and Public Asset Management (DIPAM), realized significant receipts through minority stake sales, strategic disinvestments, buybacks and OFSs, achieving a substantial portion of the CPSE disinvestment target. Operational reforms include rolling plans, proposal pipelines, expedited approvals, and reserving shares for retail investors in PSUs-OFS on a case-by-case basis; SEBI's reduction of OFS notice period from T-2 to T-1 aims to limit price manipulation and protect retail participation.