Disinvestment policy

Presented by
N.karthikeyan
II M.B.A'
 Contents


Introduction

Definition

Objective of disinvestment

Reasons for disinvestment

Problems of disinvestment

Overview of India's disinvestment

Conclusion
 Introduction

Investment and disinvestment are two sides of the

same coin. Investment refers to conversion of
money or cash into securities, debentures, bonds
or any other claims on money. At the same time,
disinvestment invloves the conversion of money
claims or securities into money or cash.
 Definition

“The action of an organisation or government

selling or liquidating an asset or subsidiary”is
called disinvestment
 Objectives of disinvestment


To reduce the financial burden on government

To improve public finances

To introduce, competition and market discipline

To increase growth of the firm

To encourage wider share of ownership
 Reasons for disinvestment


To meet fiscal deficit

Expantion or diversification of the firm

To repayment of government debts

Implementation of government plan

PSU's give negative rate of return on capital
 Problems of disinvesment

Dilution of ownership
Disinvestment affects labour
Overview of India's disinvestment

Disinvestment policies introduce after new
economic policy in july – 1991


The disinvestment policy as an active tool to
reduce the burden to financing the PSU


NIF (National investment fund)


Government has a borrowing plan of 4,00,000cr
roughly 2,45,000 cr would raised through
OMO
1991-92 31 PSU were disinvested and
collected amount 3038 cr

1991-01 20506 cr were collected through

disinvestment policy

1991-96 12,300 cr was generated 7300 cr

was used to fiscal deficts
UPA government received 47,901cr from
investment of equity in PSUs

2004-05 4424cr
2005-06 1581cr
2006-07 534cr
2007-08 38,785cr
2008-09 2,567cr

UPA government is plan to generated 1120cr

from disinvestment in 2009-10
This year generated 1120cr from disinvestment
like issue of IPOs there are


Oil India

RITES

Cochin shipyard

manganese ore

telecommunication consultant india

rashtriya ispat
Coming IPOs are:


NHPC – IPO will open on Aug 7 and it will close
on Aug 11
NHPC plans to raise 6048cr from its 15% stake
(168cr share issue) 5% is goes to govt
disinvestment other 10% will use for company
growth.


United Bank – IPO will come end of december
United Bank is plan to raise 400cr from its
20%stake
Proposal plan - 45000cr
Conclusion
Thank you