India Mulls Stake Sale In Three Privatised Firms To Surpass Divestment Target: Exclusive

The government is considering sale of its residual stake in Tata Communications Ltd. and is waiting to cross the legal hurdle to offload its remaining shares in Hindustan Zinc Ltd., the person told BloombergQuint on the condition of anonymity as nothing has been finalised yet.

The government is also awaiting listing of Bharat Aluminium Company Ltd. on the stock exchanges to arrive at fair market value, the official said.

Together, the government holding in the three companies is worth at least Rs 33,000 crore, based on current market prices and CLSA report on Balco. The number of shares to be sold will vary with company, the official said.

BloombergQuint has yet to receive a response to emailed queries to the Finance Ministry.

The government is looking to surpass its Rs 1.05 lakh-crore divestment target as the government stares at a revenue shortfall after it slashed corporate tax rates to among the lowest in Asia to revive the economy from its worst slowdown in six years. That, coupled with lower-than-expected goods and services tax collections, will test the government’s ability to meet its 3.3 percent fiscal deficit target despite a one-time transfer worth Rs 1.76 lakh crore from the central bank.

The Department of Investment and Public Asset Management has written to Department of Telecommunications, the administrative ministry that holds stake in Tata Communications, to identify all assets for sale, according to the official quoted earlier. The government's 26 percent in the owner of undersea and terrestrial fibre assets, formerly VSNL, was worth Rs 2,661 crore on Friday.

The divestment department has also asked the telecom ministry and Ministry of Housing and Urban Affairs if it needs assistance with monetising Tata Communications’ land that was hived off into Hemisphere Properties India Ltd., he said. The finance ministry asked if the two departments want the divestment agency to initiate the sale of land, and to make sure there’s no litigation over land if they offload it themselves, he said.

In August, Tata Communications had received approval from the Ministry of Corporate Affairs to spin off surplus land in the separate company. Shares of HPIL will be transferred to the government and shareholders of the company. The Housing and Urban Affairs Ministry controls the company.

The government also wants to put on the block its 29.54 percent in Hindustan Zinc but is awaiting Supreme Court’s decision. The court had put the sale on hold after employee unions filed a petition against the divestment. The government’s stake is valued at Rs 27,081 crore as on Friday.

The Modi administration is also waiting for listing of Balco by Vedanta Ltd. The government owns 49 percent in aluminium producer. CLSA has valued the company at Rs 5,550 crore, and the Vedanta board had in 2014 approved the acquisition of the government’s remaining stake for up to Rs 3,000 crore. Billionaire Anil Agarwal wants to consolidate its metal empire but the government’s residual stake in Balco and Hindustan Zinc has prevented a merger.