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Divestment plans on hold till markets improve

Sep 27, 2011 01:52 PM IST Business Business

New Delhi: The finance ministry has decided to puts its divestment plans on hold in view of the ongoing deterioration in market condition.

Sources tell CNBC-TV18 that all divestments plans have been put on hold until market stabilises.

The ministry may revise its divestment target downwards. The FY12 divestment target of Rs 40,000 crore will get revised in the budget estimates in October.

The PSUs on the divestment agenda include the likes of ONGC, Hindustan Aeronautics, BHEL and NBCC.

Others names such as Oil India, RINL and SAIL also feature on the list.

Sources say the timeline of the much delayed ONGC FPO will be decided in the first week of October.

The issue, originally planned last fiscal, has been postponed several times due to volatile market conditions as the government realized that an offering in a bad market would not fetch it the amount of money it expected to mobilize as part of its overall divestment process.

As against the target of raising Rs 40,000 crore by March end, the government has been able to mop up just over Rs 1,100 crore by offloading stake in Power Finance Corporation (PFC).

In the previous fiscal, the government had raised Rs 22,763 crore from sale of equity in public sector enterprises, as against a target of Rs 40,000 crore.

It offloaded equity in SJVN, Engineers India, Coal India, Power Grid and Shipping Corporation of India last year.

Meanwhile, SAIL has written to the Department of Divestment (DoD) regarding its FPO. In its letter, according to ministry sources, SAIL has said there is no requirement for raising fresh equity.

SAIL has recommended that the government should not go ahead with the proposed divestment.