The Indian government aims to generate revenue through disinvestment in the current financial year. While plans for stake sales in IDBI Bank and Concor are underway, the government may resort to offer for sale (OFS) if necessary. The target revenue from disinvestment is Rs 51,000 crore, and the government believes it can achieve this even without involving any new public sector undertakings.
Stake Sale in IDBI Bank
The government plans to sell its combined stake of 60.72% in IDBI Bank, including the 30.48% held by the government and 30.24% held by the Life Insurance Corporation of India (LIC). Based on the current market capitalization, this sale is expected to yield Rs 35,765 crore. Potential bidders have submitted expressions of interest (EoIs) and have started due diligence on the bank. The Reserve Bank of India (RBI) is evaluating at least five potential bidders for the stake acquisition.
BEML Stake Sale
BEML, headquartered in Bengaluru, operates in the defense and aerospace, mining and construction, and rail and Metro sectors. Due to recent elections and other delays, the stake sale process for BEML faced some setbacks. However, it is now at an advanced stage. The government intends to sell a 26% stake, which could generate approximately Rs 1,532 crore, considering the current share price of Rs 1,414.35.
Stake Sale in Shipping Corporation of India Ltd (SCIL)
SCIL is involved in the operation of bulk carriers and crude oil tankers. The government plans to divest its 63.75% stake in SCIL, which, if successful, would yield around Rs 2,837 crore. The current share price stands at Rs 95.26. The sale process for SCIL is also at an advanced stage.
Remaining Revenue Gap and Options
The total revenue generated from the stake sales in IDBI Bank, BEML, and SCIL amounts to approximately Rs 40,134 crore. This falls short of the targeted revenues from disinvestment for 2023-24 by around Rs 11,000 crore. To bridge this gap, the government needs to accelerate the disinvestment process in Concor or consider an offer for sale (OFS). Additionally, the government plans to sell stakes in NMDC Steel Ltd, HLL Lifecare, Vizag Steel, and Hindustan Zinc Ltd.
Stake Sale in Concor
Concor specializes in providing inland transport by rail for containers and managing ports, air cargo complexes, and cold chains. The government aims to sell its 30.8% stake in Concor, which, based on the current share price of Rs 664.55, would generate approximately Rs 12,392 crore. However, expressions of interest (EoIs) for Concor have not yet been invited, marking the initial step in the disinvestment process.
Budget Estimates and Collection in the Previous Year
The finance ministry revised the disinvestment target from Rs 65,000 crore to Rs 50,000 crore in the 2022-23 budget estimates. However, the government collected only Rs 35,293.52 crore from disinvestment in that year.
Conclusion
The government aims to meet its disinvestment target for the financial year 2023-24, primarily through stake sales in IDBI Bank, BEML, SCIL, and Concor. These potential stake sales are expected to generate around Rs 52,526 crore, surpassing the budget estimates. However, the government may need to expedite the process for Concor and consider additional options such as OFS to achieve its targeted revenues from disinvestment.
