The Centre has decided to sell 10 per cent of its shares in Indian Oil Corporation and 5 per cent in NTPC and could get around ₹13,800 crore if the shares are sold at their current price.
- Disinvestment in both these companies will be executed through the ‘offer for sale’ route, through stock exchanges.
- Retail investors (those bidding for up to ₹2 lakh) are required to deposit the full amount at the time of the bid.
- High net-worth and institutional investors do not have to deposit any amount.
- The Cabinet Committee on Economic Affairs, in its meeting on Wednesday, gave ‘in-principal’ approval for disinvestment in these two ‘Maharatna’ companies.
- The Department of Disinvestment will finalise the date and then a ministerial panel under Finance Minister Arun Jaitley will approve the floor price for the issues.
- This is the price at or above which all investors will be required to make a bid.
Disinvestment in Indian Oil :
- The proposal is to sell over 24.28 crore shares in Indian Oil.
- Based on the latest share price of ₹334.45, this could fetch over ₹8,100 crore for the Government.
- Shares of Indian Oil closed with a marginal gain of half a per cent on Wednesday.
- After the sale , the Government will be left with a 58.57 per cent stake in Indian Oil.
Disinvestment in NTPC :
- The Government will dispose over 41.22 crore shares in NTPC
- The latest closing price is Rs 138 Per share.
- It could get over ₹5,600 crore after disinvestment in NTPC.
- Shares of NTPC closed with a loss of around 2.5 per cent on wednesday.
Goverment’s disinvestment policy for the financial year 2015-16 :
For this fiscal year, the Centre has budgeted raising
- ₹41,000 crore by diluting its stake in CPSEs.
- ₹28,500 crore through strategic divestments.
Strategic divestments — selling over 51 per cent and handing over management.
What is Pubilic disinvestment :
- The action of an organization or government selling or liquidating an asset or subsidiary. Also known as “divestiture”.
- A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.