DISINVESTMENT

PRESENTED BY

ANUP INDAPURE(14) ABHISHEK AGRAWAL(2) RAHUL PATIL(37) PANKAJ RAMTEKE(39) HARSHAL SAVADEKAR(46) KIRAN JADHAV(19) NILESH SHELKE(50) VISHAL MADREWAR(27)

PUBLIC SECTOR UNITS(PSU)
y COMPANYS IN WHICH MAJORITY STAKE HOLDER IS

GOVT. y GOVT ITSELF IS THE MANAGNING BODY OF THAT COMPANY y IN 1990, INDIAN GOVT HAD 244 PSUs WITH A TOTAL INVESTMENT OF RS.99,329 CRORE y IN 2008-09 INDIAN GOVT HAD 246 PSUs WITH A TOTAL INVESTMENT OF Rs.3,93,057 CRORE

y ARMS AND AMMUNITION AND ALLIED ITEMS OF

y y y y y y y

DEFENSE EQUIPMENT, DEFENSE AIRCRAFT AND WARSHIPS. ATOMIC ENERGY. COAL AND LIGNITE. MINERAL OILS. MINING OF ORES LIKE GOLD AND DIAMOND. MINING OF COPPER, LEAD, ZINC, TIN, MOLYBDENUM AND WOLFRAM. MINERALS SPECIFIED IN THE SCHEDULE TO THE ATOMIC ENERGY. RAILWAY TRANSPORT.

BANKS AS WELL AS INDIVIDUALS CAN BUY DISINVESTED SHARES / BONDS. . QUOTED AND TRADED ON THE STOCK MARKET. y DISINVESTED SHARES ARE LISTED. y INDIAN AND FOREIGN FINANCIAL INSTITUTIONS.DISINVESTMENT/DIVESTMENT y DISINVESTMENT INVOLVES THE SALE OF EQUITY AND BOND CAPITAL INVESTED BY THE GOVERNMENT IN PSUS.

NEED
y IMPROVE EFFICIENCY & DEVELOPE THE ECONOMY
y ENCOURAGE & EXPAND PVT ENTERPRSIE y PROMOTE FOREIGN INVESTMENT y MAINTAIN OR CREATE EMPLOYMENT y REDUCE MONPOLOY

y IMPROVE EFFICIENCY & DEVELOP THE ENTERPRISE
y INTRODUCE NEW TECHNOLOGIES & PROMOTE

INNOVATION y UPGRADE PLANT & EQUIPMENT

y IMPROVE QUALITY OF GOODS & SERVICES y NEW MANAGEMENT METHODS & TEAM

y BUDGETARY & FINANCIAL IMPROVEMENTS
y TO FUND GOVT. EXPENDITURE, REDUCE FISCAL DEFICIT

ETC y NEW SOURCES OF TAX REVENUE
y POLITICAL CONSIDERATIONS
y REDUCE SIZE & SCOPE OF THE PUBLIC SECTOR y REDEFINE THE FIELD OF ACTIVITY OF PUBLIC SECTOR

HISTORY
y The disinvestment process, which began in 1991-92 with the

sale of minority stakes in some public sector undertakings.
y Later the focus was shifted to strategic sales during 1999-

2000 to 2003-04

ONGC etc y Govt. decided to go for equity shares i. ex. Minority sales in 2005 .a governmental enterprise is privatized by auctioning a state-owned enterprise to the highest bidder. y MINORITY SALE.Modern Food Industries (India) Ltd.y A STRATEGIC SALE. ex.shares in an enterprise are sold as public offers. sold to Hindustan Lever Ltd.CIL.e.

552.371.11 CRORE y IN 2009-10 GOVT COLLECTED RS 23.74 CRORE y IN 1997-98 GOVT COLLECTED RS 910 CRORE y IN 1998-99 GOVT COLLECTED RS 5.y IN 1991-92 GOVT COLLECTED RS 3037.93 CRORE .

Rangarajan committee)  second phases (G.COMMITTEE Initiation of the disinvestment process in 1991-1992 the policy has evolved in three phases  first phases (Dr. C. Ramakrishna committee)  three phases (department of disinvestment) .V.

Krishnamurthy in Feb 1992 y To suggest the criteria for selection PSU & limit the percentage of equity .FIRST PHASE y The congress government reiterated in the interim budget about disinvestment of 20%equity in selected SOEs y The government constituted a committee under V.

y The committee submitted the report to the government in April 1993 .y The government constituted a committee under Dr.Rangarajan to institutionalize the disinvestment process in Nov. 1992.C.

.RECOMMENDATION TO GOVERNMENT The recommendation of this report emphasized the need for substantial disinvestment  Holding of 51% or more equity in only 6 industries explicitly reserved for the public sector viz ²mineral oil. arms and defence equipment etc. coal and lignite.  74% disinvestment in other industries which had dominant market share.

 Given a best possible price scheme to its worker and employees. 100% disinvestment in sick industries  24% allowed only to foreign investment in industries.  The common minimum program sought to carefully examine  A separate apex agency for designing implementing disinvestment . .

y To determine the extent of disinvestment.SECOND PHASE y United front government constituted the public sector disinvestment commission under G.V. . y To prepare an overall long term disinvestment program. Ramakrishna in august 1996 for three year. y To examine the overall sales process.

y To determine the extent of disinvestment in each of PSU . y Draw a long term program of disinvestment. y To monitor the progress of disinvestment process and necessary measure. timing etc.y To supervise the overall sales process and take decision on pricing. y To select the financial adviser for the specified PSU. y To ensure that appropriate measure are taken to protect the interest of the employees.

y The power of the commission were axed in Jan 1998. y Government referred 72 enterprise to commission but withdrew 8 later y Finally commission got 58 enterprise for monitoring and supervisory function y Recommendations are given in 12 pages to government y The commission lapsed on 30 Nov. 1999 .

2001 One of the department under Ministry of Finance from 27th may 2004 .DEPARTMENT OF DISINVESTMENT  It was set up as a separate dept. on 10th Dec. 1999  Renamed as Ministry of Disinvestment from 6th sep.

y It is works in collaboration with disinvestment commission .FUNCTIONS OF DEPARTMENT OF DISINVESTMENT y It is responsible for all the disinvestment matters y It gives suggestions on recommendations. y It implements the decision of disinvestment.

ORGANIZATIONAL STRUCTURE .

y In 1993: Rangarajan committee recommended disinvesting upto 49% and 74%. y In 1998-99: government shareholding in PSU brought down to 26% excluding strategic PSU .DISINVESTMENT POLICY y In 1991-92: Government would disinvest upto 20% of its equity y In 1992-93: The list of eligible investors was enlarged.

zinc etc Railway transport . classified the PSE·S into strategic and non strategic areas.diamond.1999: govt. iron etc Mining of copper.  Strategic area includes Arms and ammunition Atomic Energy Coal Mineral oils Mining of gold .

 In 2005: list large. profitable PSU·s. All other PSE·s were to be considered as Non strategic  In 1999-2000: govt. profitable PSU·s on domestic stock exchange & sell small portions of listed. . would continue to strengthen the strategic units and privatizing the Non strategic.

govt. would retain at least 51% equity and management control y All cases of disinvestment are to be decided on case by case basis.APPROACH FOR DISINVESTMENT y Unlisted PSE·s are to be listed y In all cases of disinvestment. .

 Mission ‡ List all profitable Central Public Sector Enterprises on stock exchanges .VISION AND MISSION  Vision: Promote people·s ownership of Central Public Sector Enterprises to share in their prosperity through disinvestment.

.y Improvement in corporate governance y greater transparency and accountability in the functioning of the Central Public Sector Enterprises y Adding market discipline to the functioning of Central Public Sector Enterprises y The disinvestment process to facilitate unlocking the true value of the Central Public Sector Enterprises for all stakeholders ² Investors. Company and the Government. Employees.

NATIONAL INVESTMENT FUND Date of establishment : 6th October 2010 Objectives of NIF : Investment in social sector projects Investment in selected PSU·s .

The corpus of the National Investment Fund will be of a permanent nature. .SALIENT FEATURES OF NIF y The proceeds from disinvestment of CPSEs will be channelised into the NIF. The fund will provide sustainable returns to government.

ANNUAL INCOME FUND DISTRIBUTION 25 % 75 % .

) Ltd. y UTI Asset Management Company Ltd. y LIC Mutual Fund Asset Management Company Ltd. .FUND MANAGERS OF NIF y SBI Funds Management Company (Pvt.

Rajiv Gandhi Gramin Vidyutikaran Yojana. Jawaharlal Nehru National Urban Renewal Mission .USE OF DISINVESTMENT PROCEEDS y Mahatma Gandhi National Rural Employment Guarantee Scheme. Indira Awas Yojana. Accelerated Irrigation Benefits Programme. Accelerated Power Development Reform Programme y y y y y .

METHODS OF DISINVESTMENT : .

STRATEGIC SALE:  DIRECT PRIVATE SALE  The states share of a firm is sold directly to private buyers.  A direct sale can be carried out in two ways: I) Competitive Bidding II) To a predetermined selected buyer .

Methodology: Structuring the transaction in terms of:  Extent of stake to be divested  Extent of management rights  Bid evaluation criteria and bidding process  Preparation and circulation of information  Preparation of transaction documents  Valuation of Assets/shares  Receiving of bids  Evaluation of bids  Signing of Sale Agreement .

VSNL. RBI Regulations Companies where government is willing to give significant MFIL. CMC. IPCL. BALCO. IBP. Precedents . SEBI. Stock Exchange. PPL. etc.PARAMETERS Pricing Transaction Costs Time Involved Regulation Suitability EXPLANATION Maximisation through competitive bidding Low 6 . HTL.10 months Companies Act. HZL.

This is preferable because :  Allows comparison  Selects highest purchase price  Greatest compliance with government Principle Advantage :  Prospective owner is known in advance  Evaluated on the basis of his ability  Bring benefits such as management. market access. technology. requirements. . etc.

to be resolved . shareholding  Low cost and less regulation Disadvantages  Time consuming  Issues relating to management. land and labour etc.Advantages  Maximises price because of transfer of management rights  Brings technical / marketing / financial / managerial expertise  Increased value of residual Govt.

PUBLIC OFFERING OF SHARES :  State sells to the public all or large block of stocks  This method is for a profitable. large-scale SOEs. . a public offering is possible only after it·s restructuring and turn-around.  If SOE is not a strong performing firm.

Particulars

Offer For Sale To Public At Fixed Price
The Transaction At A Discount Market Retail & Wholesale, With Some Reservation For Small Investors High, In The Range of 2 ² 5 % Depending On Issue 3 ² 4 Months SEBI Guidelines, Stock Exchange Requirements

Pricing Target Investor Set

Transaction Cost

Time Involved Regulation

A government may wish to privatize an SOE in two steps:
I) Sell a minority but controlling interest to an investor or core group of investors through a direct private sale. II) Once the company had become profitable, the government held shares is offered to the general public.

ADVANTAGES : 
Permit wide-spread shareholding  Characterized by openness and transparency

NEW PRIVATE INVESTMENT IN SOE: 
Add more capital to an SOE by opening equity ownership to the private sector State does not dispose any of its existing equity in the SOE Increases equity & causes dilution of government·s equity Resulting situation will be joint private/government ownership

.LIQUIDATION ² SALE OF SOE ASSETS : Government prefer to liquidate the SOE and sell its assets instead of selling it as an ongoing operation. FRAGMENTATION ² REORGANISATION INTO COMPONENT PARTS :  Breaking up or reorganization of an SOE into separate entities.  Permits piecemeal privatization & application of different methods of privatization to different component parts. thereby maximizing the overall process.

initial nine rounds of disinvestment followed this  Relatively less time consuming & has low transaction cost.  Provides open competitive bidding & makes process transparent. which do not require technology transfers or other special inputs. .  In India.PUBLIC AUCTIONS :  Public auctions are used for small or medium ² sized SOEs.

Advantages :  Transparent mechanism  Less time consuming with no regulatory compliance requirements  Low transaction cost Disadvantages :  Does not ensure broad based shareholding .

PROCEDURE FOR DISINVESTMENT y Disinvestment commission recommendation y Consideration of Cabinet Committee on Disinvestment y y y y (CCD) Selection of advisor through a competitive bidding process Receipt of the Expression of Interest (EOI) from advisors Advertising for inviting EOI from bidders Short-listing of bidders and signing of agreement .

PROCEDURE FOR DISINVESTMENT y Due diligence by prospective bidder y Preparation of share holders agreement y Based on reaction received from prospective bidder about due diligence of the PSU. the share holders agreement is finalized. wherever applicable . y Bid evaluation by IMG y These are then approved by CCD and Ministry of Disinvestment y Execution of legal documents an inflow of funds public offer announcement by strategic partner. as per SEBI takeover code.

Approval of CCD to disinvest PSE Advertisement for advisors Selection of advisor Advertisement for expression of interest from bidders Finalization of shareholders agreement. share purchase agreement Due diligence by bidders Short listing by bidders Receipt of final bids Bid evaluation CCD approval to disinvestment terms and conditions Execution of legal documents and inflow of funds .

COMMEETTIES INVOLVED IN DISINVESTMENT PROCESS y CABINET COMMITTEE ON DISINVESTMENT y (CCD) y CORE GROUP OF SECRETARIES ON DISINVESTMENT (CGD) y INTER-MINISTERIAL GROUP (IMG) y MINISTRY OF DISINVESTMENT .

CABINET COMMITTEE ON DISINVESTMENT (CCD) y Chaired by Prime Minister y Functions -To consider the advice of core group of secretaries -To decide the price band -Intervention in the case of disagreement between the recommendations -To approve the three year rolling plan and the annual programme of disinvestment .

CORE GROUP OF SECRETARIES ON DISINVESTMENT(CGD) y Headed by Cabinet Secretary y Functions -supervises the implementations of the decisions of all strategic roles -Monitors the progress of implementation of the CCD decisions -Make recommendations to CCD on disinvestment policy matters .

INTER-MINISTERIAL GROUP (IMG) y Chaired by Secretary and Ministry of Disinvestment y Function -Examination of Bids received -Analyze and Evaluation of bids .

MINISTRY OF DISINVESTMENT y Set up in 1999 y Assisted by advisors y Business allocated to Ministry of Disinvestment -All matters related to disinvestment -Decisions on recommendations of the Disinvestment Commission -Implementation of disinvestment decision .

AIRPORT PRIVATISATION MUMBAI AND DELHI AIRPORT .

OBJECTIVES OF AIRPORT PRIVATIZATION y Providing world class infrastructure without the need to y y y y invest heavily on the part of Government Increasing operational efficiency of airport Meeting the rapid growth in the passenger numbers Bringing international expertise in the Airport Development and Management Increasing the capacity of present airports .

Prime Minister made declaration that world class airports should be set up in the country y June and July 2003.Modernization of Mumbai and Delhi Airports considered by Airport Authority OF India (AAI) y 1998. These agreement was signed for a minimum period of 30 years .The AAI approve modernization proposal costing Rs 30 billion through privatization route for Mumbai and Delhi Airports.TIME LINE PRE-BIDDING PROCESS y 1996.

Ministry of Civil Aviation constituted IMG in 2003 November to assist the EGoM y December 2003.Restructuring of Mumbai and Delhi Airport was approved by NDA Government and a long term lease on the basis of Joint Venture was established y November 2003.TIME LINE PRE-BIDDING PROCESS y September 2003.The EGoM approved the appointment of ABN Amro as Financial Consultant(FC) and Air Plan as a Global Technical Advisor .

SCOPE OF THE COMMITTEES INVOLVED IN BIDDING PROCESS EMPOWERED GROUP OF MINISTERS (EGOM) y SCOPE y DICISION ON KEY ISSUES y BUILD CONSENSUS AMONG VARIOUS ALLIES OF THE RULLING COALITION OF GOVERNMENT. INTER MINISTRIAL GROUP(IMG) y BUREAUCRATICTEAM OVERSEEING TRANSACTION y DEBATE KEY ISSUES WITH REPRESENTATIVE OF VARIOUS MINISTRIES y APPROVED DRAFT PUT UP BY EXECUTION TEAM AND TRANSACTION APPROACH .

SCOPE OF THE COMMITTEES INVOLVED IN BIDDING PROCESS Evaluation committee(EC) y Scope -Originate transaction structure -Pre qualification criteria -Coordination with bidders -finalize transaction and invite bidders -Negotiate with bidders and finalize documents -Move final documents for appropriate GOI approval .

SCOPE OF THE COMMITTEES INVOLVED IN BIDDING PROCESS GOVERNMENT REVIEW COMMITTEE(GDC) -Scope  Independent review of evaluation undertaken by the EC COMMITTEE OF SECRETARIES(CoS) -Scope  Recommended the selection of appropriate joint venture partners .

TIME LINE PRE-BIDDING PROCESS y February 2004-An Invitation to Register an Expression of Interest(ITREOI) for acquisition of 74 % stake in the Joint Venture Company(JVC) was issued y May 2004-The country went for general elections in May 2004. resulting in the change of the Government to the United Progressive Alliance(UPA). but from outside the government EGOM was reconstituted y The EGOM put a cap of 49% on foreign direct investment within 74% of private equity in the JVC .The UPA coalition government was supported by parties.

JVC 74% PRIVATE CONSORTIUM 26%AAI 49% FDI LIMIT AND 1O% SCHEDULED AIRLINES .

2004 y April 2005. The RFPs documents for Mumbai and Delhi airports and the draft transaction documents were issued to 9 PQBs .TIME LINE PRE-BIDDING PROCESS y July 2004-Ten bidders submitted EOIs by July 20.The EGOM approved key principles of RFP documents along with draft transaction documents.

. constructing. developing. Non-aeronautical activities restricted to 5% of total land in Delhi and 10% of total land in Mumbai. maintaining. upgrading. modernizing and managing the airport to JVC y The OMDA contained a list of aeronautical and nonaeronautical activities.TRANSACTION DOCUMENT OPERATION MANAGEMENT AND DEVELOPMENT AGREEMENT(OMDA) y Under this agreement the AAI granted the right to undertake the functions of operating. designing.

AIRPORT OPERATOR REVENUE STREAM NONAERONAUTICAL AERONAUTIC AL AERO RELATED LOADING CHARGES PACKING CHARGES PASSENGER SERVICE FEE CARGO BANDING AIRCRAFT REFUELING AIRCRAFT MAINTAINANCE CATERING SERVICES CAR PARKING COMRCIAL(T ERMINAL) ADEVERTIS ING FEE COMMERCIA L (OTHER) REAL ESTATE DEVELOPEME NT HOTELS RENT FROM BUSINESS SHOPS RETAIL AND ENTERTAINME NT .

y The Government in order to facilitate process would provide a single window scheme . y It would be the responsibility of JVC to arrange for all the clearances that were required by the applicable laws.TRANSACTION DOCUMENT Operation Management and Development Agreement(OMDA) y The JVC was first to submit master plan before the expiry of six months from the date of execution of the OMDA and thereafter update and resubmit the same after every 10 years.

the land would be lease for a period of 30 years from the effective date and would. be renewed for a an additional period of 30 years. .TRANSACTION DOCUMENT y Lease Deed (LD) y According to LD. in the event the JVC renewed the termed of OMDA.

TRANSACTION DOCUMENT SHAREHOLDERS AGREEMENT(SHA) y The AAI.5 billion with an initial subscription of Rs 2 billion . GOI and PSUs would hold 26% of total share and private participant would hold 74% y Foreign shareholding would restricted to 49% y Scheduled airline equity cap was restricted at 10% y JVC should have an authorized share capital of Rs 2.

additional land for airport development.TRANSACTION DOCUMENT STATE GOVERNMENT SUPPORT AGREEMENT(SGSA) y The State Government intended to make best efforts in providing support to the company and AAI on matters relating to encroachments. provision of utilities. safety and security. surface access to airports. .

construction Munich Sterile-Macqauarie-ADP Essel-TAV Essel-TAV GVK-ASCA .fraport DS.fraport DS.construction Munich Sterile-Macqauarie-ADP Bidders for Mumbai Airport Reliance-ASA GMR.LIST OF BIDDERS Bidders for Delhi Airpot Reliance-ASA GMR.

EVALUATION PROCESS OF BIDS y Any bidder not meeting the mandatory requirement have its offer removed y All remaining offers are assessed on technical qualification criteria and only those assessed with technical prequalification on each of the two criteria of 80% or more proceed to next phase y The offer of the bidder with highest financial consideration for airport is selected as the successful bidder .

No consortium member is participating in more than one consortium bidding for same airport Consortium has an airport operator who has relevant and significant experience of operating.ASSESSMENT OF THE MANDATORY REQUIREMENT y Confirmation that the net worth criteria of the bidder as per the y y y y requirement in the ITREOI document continues to be fulfilled. managing and developing airports Confirm that the initial development is accord with development planning principles and traffic forecasts FDI in JVC does not exceed 49% .

which are -management capability. commitment and value add -development capability.ASSESSMENT OF TECHNICAL PREQUALIFICATION y The purpose of technical pre-qualification is to ensure that only those bidders that can address the GOIs strategic objectives are evaluated at the final phase of the evaluation process y Only bidders satisfying the benchmark of 80% under the technical pre qualification requirements are allowed into final phase of evaluation y This phase is subdivided into two sections. commitment and value add .

‡Management capability ‡Experience of the nominated airport operator ‡Experience of the prime members Managemen t capability. committee and value add ‡Business plan . committee and value ‡ development capability ‡Master planning ‡Airport development ‡Management committee ‡Commitment of the airport operator ‡Commitment of prime members ‡Development committee ‡Infrastructure development Evaluatio n criteria ‡ Development value add ‡Development path ‡Flexibility ‡Aeronautical operations ‡ management value add ‡HR approach ‡Transition plan ‡Environmental management Developmen t capability.

2 92.TAV GVK .2 DEVELOPMENT CAPABILITY.0 39.9 61.ASA GMR .Mcquarie-ADP Essel .9 40.1 57.7 57.9 72. COMMITTEE AND VALUE ADD 80. COMMITTEE AND VALUE ADD 81 80.Fraport DS ² Construction Munich Sterilite .7 54.9 72.Fraport DS construction Munich Sterilite .1 55.Mcquarie Essel .ACSA 80.4 84.3 59.3 .7 57.3 Delhi Airport Reliance.ASA GMR .2 84.TAV Mumbai Airport Reliance.0 37.1 28.1 69.8 80.BIDDER MANAGEMENT CAPABILITY.

announcing two short listed consortia.TIME LINE POST BIDDING STAGE y September 2005-The AAI employee called for a nationwide strike. RelianceASA and GMR-Fraport based on the qualifying marks of 80% .The EC placed its reports before the IMG. protesting against privatization which was called off later during the day y November 2005.

TIME LINE POST BIDDING STAGE y After considering the recommendations of the GRC directed the EC to re evaluate the scores of the bidders. The re evaluated scores are as under .

9 72.9 72.Mcquarie Essel .2 81 80.1 57 35.7 54.8 92.4 Delhi Airport Reliance.2 84.3 84.1 28. COMMITTEE AND VALUE ADD OLD NEW 72.ACSA 80.Fraport DS construction Munich Sterilite .2 92.3 80.8 73.1 29.4 59.TAV GVK .5 70.ASA GMR .ASA GMR .3 .7 80.1 55.7 73.7 57.7 73.Fraport DS ² Construction Munich Sterilite .7 57.7 54.9 84.Mcquarie-ADP Essel .2 84.3 59.6 DEVELOPMENT CAPABILITY.9 61.7 65.0 39.1 69. COMMITTEE AND VALUE ADD OLD NEW 75.9 41.0 37.5 76 76.9 40.TAV Mumbai Airport Reliance.5 61.1 57 37.BIDDER MANAGEMENT CAPABILITY.1 57.3 77.

2006. None other than GMR-Fraport score more than 80% . the marks for other bidders did change.TIME LINE POST BIDDING STAGE y December 2005.As expected.Several objections were raised in revised scores by various political allies and bidders whose interest were affected y January 17.

1 70.McquarieADP Essel .4 45.9 84.TAV 79 84.7 73.3 53.1 29.TAV Mumbai Airport Reliance.63 40.Mcquarie Essel .5 74.15 37.BIDDER MANAGEMENT CAPABILITY.3 53.8 81.ASA GMR .3 80. COMMITTEE AND VALUE ADD OLD 77.5 38.4 DEVELOPMENT CAPABILITY.5 61.Fraport DS construction Munich Sterilite .5 40.7 73.8 81.1 57 37.69 43.2 92.1 57 35.7 54.7 65.9 41.33 33.12 BID NOT OPEN BID NOT OPEN .03 28.4 BID NOT OPENED Delhi Airport Reliance.4 21.6 NEW 74.Fraport DS ² Construction Munich Sterilite .7 73.7 73. COMMITTEE AND VALUE ADD 81 80.ASA GMR .

Ltd filed a writ petition in Delhi High Court making several allegations against AAI The Court rejected this plea on the primary ground .Reliance Airport Developers Pvt.TIME LINE POST BIDDING STAGE y January 2005-The following decisions were made y GMR-Fraport chose Delhi Airport and matched the y y y y highest bid of Reliance-ASA GMR-Fraport was selected for Delhi-Airport Mumbai Airport was awarded to GVK-ASCA February 2005.

LESSON LEARNT y Proper weight ages should have been assigned to the sub factors y Norms during the bid process need to be specified and compiled with y Committees should be given sufficient autonomy to make decisions .

RECENT DISINVESTMENT .

04.2010 Closing Date Issue Type % Govt Divested 10.00 1. COAL INDIA LTD.07. 30.12.09 7.13 SHIPPING CORP.12.2010 03.2010 21.2010 30.05.Company Opening Date 29.2010 IPO 1.2010 12.442.74 ENGINEERS INDIA LTD.2010 FPO 9.237.10.062.73 .11. 03.2010 FPO 10. SJVN Ltd.164.199.11.OF INDIA LTD.2010 FPO 9. 27.03% Issue Amt.OF INDIA LTD.09 1.2010 IPO 20.65 18.07.44 POWER GRID 09.2010 CORP.10.2010 IPO 10. 26.11.11. MOIL LTD.00 959.34 01.00 15.

UPCOMING DISINVESTMENT y IOC y ONGC y Hindustan Copper Ltd. .

y In IOC. DoD has proposed to sell 5 per cent of government equity through a FPO. which will also issue 10% fresh equity in a follow-on public offer.IOC y The government plans to divest 10% of its stake in IOC. y IOC also proposes to sell 10 per cent of the expanded equity capital .

57% y The government aims to raise close to Rs 10.92% to 64. the twin divestment and stake sale would reduce the government holding from 78. .y In IOC.000 crore through IOC while an equal amount would come to IOC through fresh equity sale.

14% from 74. . y Post divestment.ONGC y The government plans to divest 5% of its stake in ONGC. y ONGC's disinvestment of 5 percent is expected to raise about Rs 15000 crore for the government. y Mostly comes in Feb-March 2011.14% currently. the government·s shareholding in ONGC will come down to 69.

y IOC & ONGC will be the major contributor.y Govt plans to raise 40.000 cr through disinvestment. y Govt already fetched 20. .000.

y Govt is planning to divest 10% stock. y Govt plan to raise 4.59% of the stock is held by Government. Insurance majors. and general public.41% is out in the open including Domestic / Foreign Financial institutions. y Presently 99. y 0. . Mutual funds.HINDUSTAN COPPER LTD.000 crores through the FPO.

IMPACT y ON PERFORMANCE OF DISINVESTED PSE·s y ON PERFORMANCE ON INDUSTRY y ON GOVT BUDJET y ON CAPITAL MKT y ON INVESTMENT IN SOCIAL SECTOR y ON INFLATION .

PERFORMANCE OF DISINVESTED PSE·s  Only ownership transfer. shows ´MIXED PERFORANCEµ  Individual performance depends on particular enterprise  Performance is irrespective of extent of divesture  Changes due to change in environment . not affect on capital  Partly disinvested but controled by govt.

PERFORMANCE OF INDUSTRY  Increase in competitiveness  Increase in efficiency  Increase in productivity .

GOVT BUDGET  Increase in cash inflow  Reduction in fiscal deficit  Increase in tax inflow  Increase in FDI .

CAPITAL MARKET  Increase in price of share by 100 % just in 1&1/2 years INVESTMENT IN SOCIAL SECTOR INFLATION .

.

BALCO y Bharat Aluminum Company Ltd. y Establish ² 1965 y Plant .´Korbaµ(Chattisgarh) Bidhanbagh (WB) y Capacity.Refining 2 lakh tonnes / p.a.a. Smelting 3.5 lakh tonnes / p. .

it was accepted by Govt.Disinvest 40% to strategic partner and further 34% in next 2 years through public offer -Further it recommendate remaining sale at appropriate time 1998 ² it revised to sale 51% stake to strategic buyer . .1997 ² Disinvestment commission recommendate BALCO as non-core.appointed by M/s Jardine Fleming as advisor . .

9-1072.March 2001 ² To´ STERLITE INDUSTRIESµ 51%stake for Rs.7 587.9 1054.0 597.tax Valuation method Discounted cash flow comparables Balance sheet method Asset valuation Value (in crore) 651.5.5 crore (551.5+244+31) 551.2.2-994.826.2 .for 51% stake 244.Govt.681. earn Rs.0-909.5 crore . 551.from capital Restructuring 31.

29 630.24 632.72 806.89 2001-2002 615.47 897.19 2.03 _ .19 _ 2002-2003 856.1 2.11 101 96.44 116.64 966.28 160.24 791.y Performance Details sales Total income Total expenditure Gross Profit Profit before tax Profit after tax 2000-2001 894.19 55.

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