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Cabinet gives in-principle approval for strategic sale in PSUs

28 Oct 2016 Evaluate

The Union Cabinet has given in-principle approval for strategic sale in over a dozen public sector undertakings (PSUs) including those that are making profits, as recommended by the government think thank Niti Aayog. Although, the government has not disclosed the number and names of public sector companies in which it will sell stakes, but the companies are a mix of loss-making and profitable units and the government is looking to bring down its stake to less than 50% in some of them.

Finance Minister Arun Jaitley said the names of PSUs that are up for strategic stake sale would be made public once they are going to be put up for the auction. Specific cases would now come up after a detailed examination as to how it is to be done in each case and the details with regard to the units concerned will be furnished at that stage. This list does not include PSUs for closure. He added that some of these are important units and therefore since each unit would be considered in its own merit, the timing of that would be decided by the government accordingly.

With regard to valuation of these PSUs, Jaitley said that there are settled valuation processes and a transparent one would be followed. He said that sale methods and valuation for PSUs or units up for sale would be examined by the Department of Investment and Public Asset Management (DIPAM) and the line ministry. DIPAM and the ministries, under which these companies function, will now draw up a detailed plan for the stake sales, cabinet’s approval will again be sought for each of them separately.

The government's disinvestment target for the current financial year is Rs 56,500 crore. Of this, Rs 36,000 crore is expected from minority stake sales and buybacks. The rest Rs 20,500 crore is expected from 'strategic sales' in loss-making or profit-making PSUs or their assets (factories, warehouses, office buildings, etc).


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