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June 28, 2001
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Money > Business Headlines > Report June 28, 2001 |
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DoD unsure about plan panel divestment targetBS Economy Bureau The department of divestment has said it is unsure about the proposed divestment target of Rs 160 billion per year put forward in the draft approach paper to the Tenth Five-Year Plan. While the finance ministry had also expressed reservations earlier, it is learnt to have cleared the target eventually. The Planning Commission is of the view that the government can raise around Rs 750 billion via divestment over the five-year period. The divestment minister, Arun Shourie, who attended the meeting has, however, expressed apprehensions about the likelihood of DoD being able to meet the target, sources said. On the one hand, the Planning Commission has argued that the valuation of the public sector units is in the neighbourhood of Rs 3000 billion and given a debt-equity ratio of 2:1, the asset valuation of the companies should yield anywhere between Rs 1,50,000 and Rs 1,60,000 for the government. Assuming that on an average the government disinvests 50 per cent of the equity, it can garner resources in the range of Rs 750 to Rs 800 billion. Shourie, however, pointed out that given the pace of divestment in the country, the possibility of raising this kind of money seems remote. Merely hiving off Balmer Lawrie from IBP Ltd took eight months and progress on the Hotel Corporation of India divestment has been negligible despite assurances from the civil aviation secretary around three months ago that he would ensure expeditious finalisation of the sale. Also, the kind of money the Planning Commission is targeting means that the government will have to go in for big ticket divestments, which are more difficult to push through, Shourie is reported to have pointed out. So, even if the valuation of the government enterprises is around Rs 3,000 billion, translating it into hard cash will be fairly difficult, he pointed out. Powered by YOU MAY ALSO WANT TO READ:
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