IDBI, SCI, other stake sales to fetch Rs 40,000 cr, help Centre near FY24 target

In order to get closer to the Rs 51,000 crore target, the maximum will come from offer for sale (OFS) or minority stake sales.

The Finance Ministry is eyeing to complete the strategic sales of Shipping Corporation of India (SCI) and IDBI Bank, and a host of offers for sale (OFS) in FY24. This should fetch the government at least Rs 40,000 crore in disinvestment receipts this year, said a senior government official on condition of anonymity.

That, however, is short of the budgeted disinvestment target of Rs 51,000 crore. In this financial year, the government has made Rs 4,235 crore through offers for sale. Of this, the Coal India OFS fetched Rs 4185 crore.

“The strategic sales of only SCI and IDBI Bank are likely to be completed this year. If IDBI Bank and SCI get completed then not much shortfall is likely in the disinvestment target,” said the official cited earlier. “The saving grace is that there is not much controversy in IDBI Bank privatisation.”

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The government is aiming to issue the financial bids of SCI in September and complete the transaction by December. For IDBI Bank, the aim is to issue financial bids by December and close the transaction in the fourth quarter. The IDBI Bank privatisation is likely to get Rs 15,000-16,000 crore to the government while SCI strategic sale is likely to fetch around Rs 3,000 crore.

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“In order to get closer to the Rs 51,000 crore target, the maximum will come from offer for sale (OFS) or minority stake sales,” the official said. Ideally “60 percent of the target should have been met via strategic disinvestment. Unless major strategic sales happen, the government will not be able to meet the target this year as well.”

India’s track record in meeting the budgeted disinvestment target has been dismal. With no strategic sale coming through in the last fiscal year, disinvestment receipts were Rs 15,000 crore short of even the revised target of Rs 50,000 crore.

FY24 being a pre-election year, strategic sales are not expected to go through at a great speed as the optics of this economic reform may not be seen in popular light.

Other strategic sales, including Bharat Earth Movers Limited (BEML) and Container Corporation of India Limited (CONCOR) are running delayed and unlikely to get completed in the current fiscal year.

As many as 14 strategic sales are underway at the Department of Investment and Public Asset Management (DIPAM) wing of the Finance Ministry with the likes of smaller PSUs like PDIL and HLL Lifecare still pending.

These include the likes of HLL Lifecare, where the request for proposal (RFP) and draft share purchase agreement (SPA) have been approved by inter-ministerial group (IMG). The next step is an approval of the Core Group of Secretaries on Disinvestment (CGD) and Alternative Mechanism (AM).

The IMG consists of two secretaries and senior officials from line ministries. The AM consists of Finance Minister Nirmala Sitharaman, Minister of Road Transport and Highways Nitin Gadkari, and a minister from the line ministry.

On the other hand, Projects & Development India Limited (PDIL) strategic sale may not happen as it has been put on a backburner, the official said.

Among the major OFS planned this fiscal year, the government is looking at a 5-6 percent stake sale in Hindustan Zinc; stake sales in RITES and Rail Vikas Nigam Limited (RVNL); 20 percent in National Fertilizers Limited (NFL) and 10 percent in Rashtriya Chemicals & Fertilizers Ltd (RCF).

Moreover, the government is also looking to list three companies – Indian Renewable Energy Development Agency Ltd (IREDA), National Seeds Corporation (NSC), and possibly WAPCOS, a PSU in engineering consultancy and construction under Ministry of Jal Shakti, the official said. The government is aiming at a 25 percent stake sale in NSC via an initial public offer, this person said.

The IPO of ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Ltd.), which promotes exports by providing credit risk insurance, was approved by the Union Cabinet in 2021.  “But there is no demand in the market for the ECGC IPO,” he said.