Rs 7,000 crore selloff shortfall seen

With Maruti Udyog initial public offer and Engineers India strategic sale the only big divestment deals likely to go through in the current financial year, the government is set to end up with a shortfall of over Rs 7,000 crore (Rs 70 billion) in its divestment target.

The government has mopped up Rs 3,336 crore (Rs 33.36 billion) till date from divestment in the current year and hopes to reach the figure of about Rs 5,000 crore (Rs 50 billion) with proceeds from Maruti and EIL, a senior divestment ministry official told Business Standard.

Based on Rs 2,300 per share guaranteed by Suzuki Motor Corporation, the government would get about Rs 828 crore (Rs 8.28 billion) from the sale of 3.6 million Maruti shares comprising 25 per cent of its residual equity in the company.

While merchant bankers are not very optimistic about the government getting a huge premium over the price at which Suzuki has underwritten the IPO, the government hopes to net at least Rs 900 crore (Rs 9 billion) from Maruti, the official said, adding the assumption was made Rs 2,500 per share of Rs 100 face value.

The divestment ministry is finalising the modalities of the IPO, which is expected to hit the markets before March, he said.

The government hopes to complete the strategic sale of 51 per cent equity in EIL, the final price bids are expected to be called soon after the next meeting of the CCD.

The government also hopes to complete transactions in some smaller entities including like Nepa Ltd, State Trading Corporation, Hindustan Cables Ltd and a couple of hotel properties.

Among India Tourism Development Corporation and Hotel Corporation of India properties, Delhi Centaur and catering wing Chef Air are expected to be sold.

ITDC's Samraat hotel, whose disinvestment is hanging fire due to a security clearance as the property overlooks the Race Course Road residence of the Prime Minister, is also likely to go through, the official said.