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Govt to disinvest 5 % in NTPC and 10 % in Indian Oil

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

  1. ₹41,000 crore by diluting its stake in CPSEs.
  2. ₹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.