Ipcl May 02 26 64 5 1 example essay topic

Other than Modern Food Industries (India) limited, only minority stakes in different PSEs were sold before the year 2000. The Government has since modified its policy to emphasise on strategic sales. The disadvantages of sale of minority stakes by the Government have been found to be as follows: Lower realisation's because the management control is not transferred. Moreover, it signals lack of commitment to efficient governance of PSEs. With the limited holding remaining with the Government after minority sales, only small stakes can be offered to the strategic partner, if it is decided to go for a strategic sale subsequently. This depresses the possibility of higher realizations from the strategic partner, especially since the latter has to offer the same price to other shareholders also through an open offer.

The minority sales also give the impression that the main objective of the Government is to obtain funds for reducing its fiscal deficit, and not to improve performance or governance. The following table indicates the actual disinvestment from 1991-92 till date, the methodologies adopted for such disinvestment and the extent of disinvestment in different CPS Us: Actual Disinvestment from April 1991 onwards and Methodologies Adopted Year No. of Companies in which equity sold Target receipt for the year (Rs. in Crore) Actual receipts (Rs. in Crore) Methodology 1991-92 47 (31 in one tranche and 16 in other) 2500 3038 Minority shares sold by auction method in bundles of "very good", "good", and "average" companies. 1992-93 35 (in 3 tranches) 2500 1913 Bundling of shares abandoned. Shares sold separately for each company by auction method.

1993-94-3500 Nil Equity of 7 companies sold by open auction but proceeds received in 94-95.1994-95 13 4000 4843 Sale through auction method, in which NRIs and other persons legally permitted to buy, hold or sell equity, allowed to participate. 1995-96 5 7000 362 Equities of 4 companies auctioned and Government piggy backed in the IDBI fixed price offering for the fifth company. 1996-97 1 5000 380 GDR (VSNL) in international market. 1997-98 1 4800 902 GDR (MTNL) in international market.

1998-99 5 5000 5371 GDR (VSNL) / Domestic offerings with the participation of FI Is (CONC OR, GAIL). Cross purchase by 3 Oil sector companies i.e. GAIL, ONGC & Indian Oil Corporation 1999-00 4 10000 1829 GDR-GAIL, VSNL-domestic issue, BALCO restructuring, MFIL's strategic sale and others 2000-01 4 10000 1870 Strategic sale of BALCO, LJMC; Takeover - KARL (CRL), IPCL (MRL), B RPL 2001-02# 9 12,000 5603 Strategic sale of CMC - 51%, HTL -74%, VSNL - 25%, IBP - 33.58%, PPL -- 74%, and sale by other modes: ITDC & HCI; surplus reserves: STC and MMT C 2002-03# 5 12,000 3348 Strategic sale: HZL - 26%, MFIL-26%, IPCL - 25% HCI, ITDC, Maruti: control premium from renunciation of rights issue, ESOP: HZL, CMC. 2003-04# 1 13,200 993 Maruti- IPO. Total 47 91500 30452 Total number of companies in which disinvestment has taken place so far. # Figures (inclusive of amount expected to be realised, control premium, dividend / dividend tax and transfer of surplus cash reserves prior to disinvestment etc.) (Rs. 31 crore taxes from BALCO) The Government has recently finalised the privatisation / disinvestment of the following 12 companies through strategic sales and 18 hotels of ITDC and 3 of HCI through de merger / slump sale (till 15th July 2002).

The taxpayer has gained large sums of money through these sales as the following table reveals: Strategic Sale of PSEs Year 2000 Onwards Sr. No Name of PSE Date Ratio of paid up Equity Sold % Face Value of Equity Sold (Rs. in Crore) Realisation (Rs. Crores) 1. Modern Foods Jan-00 (i) 74 (ii) 26 9.63 3.38 105 44 2. LJMC Jul-00 74 0.7 2.53 3. BALCO ^ Mar-01 51 112.52 826.5 4. CMC Oct-01 51 7.73 152 5.

HTL Oct-01 74 11.1 55 6. VSNL ^ Feb-02 25 71.2 3,689 7. IBP Feb-02 33.6 7.4 1,153.70 8. PPL Feb-02 74 320.1 151.7 9. Jessop Feb-02 74 68.1 18.2 10. HZL Apr-02 26 109.8 445 11.

IPCL May-02 26 64.5 1,490.80 12. Maruti Udy og May-02 27.5 39.73 1,993 13. Tax / withdrawal of surplus cash prior to disinvestment. Subject to court order. Subject to B IFR approval. top.