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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: JPR who wrote (2250)	8/7/1998 3:09:00 PM
From: Mohan Marette	Respond to of 12475

Govt. to shed up to 74% of PSUs- Best news I heard all day. JPR: Here is some good news. If they go through with it this is going to be one of the best things that have ever happened in India in terms of the economy and even otherwise. Source:Business Standard. Government to shed upto 74% in select state-owned companies; structural mechanism to be instituted to speed up disinvestment proceeds Anil Padmanabhan in New Delhi The cabinet on Friday cleared several decisions which are sharply divergent from the previous policy on public sector disinvestment, including shedding management control in state-owned companies selected for strategic sale to one private partner, adopting market pricing as the underlying criteria and setting up a structural mechanism to speed up the divestment process. Under the structural mechanism, state-owned companies (also known as PSUs) selected for divestment will be freed from the administrative control of the parent ministry and placed under a new body, to be created for piloting the process. With these decisions, the government has fulfilled finance minister Yashwant Sinha's budget promise to privatise select PSUs and also effected a paradigm shift in the divestment process, say top officials. These decisions had earlier been endorsed by the group of ministers, which includes finance minister Yashwant Sinha and HRD minister Murli Manohar Joshi. Neither was present at the cabinet meeting. The decision to allow market pricing to be the deciding factor rather than some pre-fixed price gives the core group of secretaries on disinvestment tremendous flexibility in deciding the timing and the size of an issue. In the past, several public sector disinvestment proposals - like Videsh Sanchar Nigam Ltd and Container Corporation - ran aground because the government remained committed to a fixed issue price and size. Four PSUs are slated to hit the markets some time in September, namely Concor, GAIL , VSNL and IOC. Keeping in mind the growing opinion in government that the emphasis should be on strategic sales, the cabinet has decided that upto 74 per cent should be offloaded in these ventures. Four PSUs have been selected for strategic sale in the first batch - ITDC, Modern Foods, Kudremukh Iron Ore Ltd and Balco. In the case of ITDC, the disinvestment will not be uniform and will depend on the location of various hotels, sources said.