The government has shown its intent for privatization after selling Air India and finding a buyer for Neelachal Ispat. It has set a divestment target of ₹ 65,000 crores for this year.
Hindustan Zinc Limited
The Cabinet Committee on Economic Affairs has approved the sale of the government’s entire remaining stake in Hindustan Zinc Ltd as the Centre looks to accelerate its divestment drive.
The government currently has a 29.5% stake in the company. The sale of this stake will fetch approximately ₹38,062 crores. Another major shareholder of the company is Vedanta Limited which holds a 64.92% stake.
The number of shares in Hindustan Zinc pledged by Vedanta Limited increased from ₹ 626.2 million shares during the December quarter to 2360.5 million shares during the March quarter. In short, the metals and mining major has pledged 86.1% of its shareholding in Hindustan Zinc. This information is significant in the wake of the government’s decision to sell its entire residual stake in Hindustan Zinc.
The government may sell its stake in tranches through an offer for sale and the same will be structured by the Department of Investment and Public Asset Management (DIPAM), an official said. This will help the Centre in moving closer to its ₹ 65,000-crore divestment target for the financial year 2022-23.
Bharat Petroleum Corporation Limited (BPCL)
The government has called off the strategic sale of BPCL after companies that were initially interested in buying a stake in the state-run refiner changed their minds because of the pandemic and soaring global energy prices that forced them to sell fuel below cost.
The government wanted to sell its entire 52.98% stake in the company and had invited Expressions of Interest (EoIs) from bidders in March 2020. About three bids were received by November 2020. However, the privatization was put on halt stating that it will be taken up after reviewing the situation.
This happened after two bidders walked out over issues such as lack of clarity in fuel pricing, with just one bidder left.
Shipping Corporation of India
Once the demerger of its non-core assets is completed, the government is likely to invite financial bids for the Shipping Corporation of India. The government is hiving off Shipping House and the training institute and some other non-core assets of Shipping Corporation of India (SCI), as a part of the strategic-sale process.
Container Corporation of India’s non-core assets held for demerger as of March 31, 2022, stood at ₹2,392 crores and they will be sold to Shipping Corporation of India Land and Assets Ltd (SCILAL).
The government received multiple bids for the privatisation of the Shipping Corporation of India in March last year.
Container Corporation of India
The Central Government is planning to modify the railway land-use rules and slash the land licensing fee (LLF) for industrial use from 6% to 3.56%. This move is likely to ease the strategic sale of the state-owned Container Corporation of India as it will make the deal more attractive for investors.
The Railway Ministry is expected to extend the tenure of the lease period to 20 years from the existing five years. The government is expecting to garner ₹ 8,000 crores (approximately) by selling its stake in the company.
Major Divestments
So far, the government has collected ₹ 23,575 crores this year in divestment proceeds. It sold a 3.5% stake in the Life Insurance Corporation of India which helped it to raise about ₹ 21,000 crores. Further, it sold a 100% stake in Air India for ₹18,000 crores and received ₹2,700 crores in cash. In addition, it sold its entire stake of 19.55% in Paradeep Phosphates Limited’s initial public offer.
