Markets
BSE See NSE See 39,601.63
488.89 (1.25%)
collapse Related Readings collapse

Disinvestment: Government Weighs Its Options

| 5/2/2013 9:00 PM Thursday

The Finance Ministry has ambitious plans of mopping up huge funds through disinvestments and is considering a number of alternatives for doing so. While Amit Bhanot provides an analysis of the various routes the government can take to achieve its target and discusses their pros and cons, the OFS route seems like the most practical one.

The government is quite ardent on achieving its disinvestment target and has chalked out some plans to do so. Its successful disinvestment spree that enabled it to gross an all-time high of Rs 23920 crore in FY13, has instilled a sense of confidence to raise another Rs 40000 crore this year through a series of issues. 

As the Finance Minister is taking all possible steps to woo foreign investors for bridging India’s ever-increasing CAD, his ministry’s officials too are taking all possible efforts in this direction. The Department of Disinvestment (DOD), a key department under the Ministry of Finance, is working hard to ensure that the disinvestment target of Rs 40000 crore set for FY14 is met. Along with the usual Offer for Sale (OFS) method, the DOD is considering an array of different strategies to collect crucial funds including a buyback, Initial Public Offerings (IPOs) and Follow on Public Offers (FPOs). 

But the way the government has undertaken disinvestment in the last two years raises some key questions about the sanctity of the ways adopted for stake sales, particularly of blue chip PSUs. In fact, a parliamentary standing committee on finance under the chairmanship of Yahwant Sinha not only termed the government’s disinvestment policy as ‘selling family's silver to pay grocery bills’, but also called for a greater market penetration and encouragement to retail investors’ participation. 

The government certainly needs to resort to ways that attract more retail participation and this can be achieved efficiently via the OFS route, but that requires the government to generate awareness among retail investors regarding an OFS. Until now, retail participation in OFSs was very low owing to the confusion regarding their prices. “If we go by the benefits of OFS over other methods like FPOs, buybacks or even French Auctions, OFS certainly seems to be a better option. It saves on time and energy and the entire process can be carried out in a single day. Here, an investor can trade his scrip the next day, while it will take around eight to ten days in an FPO,” said Jagannadham Thunuguntla, Head of Research, SMC Global Securities.

 

Find More Articles on: DSIJ Magazine, Special Report, Product, Large Cap, Small Cap

«« First « Previous |1 2 3 4 | Last ››
news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

Sensex soars by 489 points

Dnyanada Kulkarni / Article rating: 4.5

The markets closed at higher levels at the culmination of Thursday’s trading session with the Sensex rising by 1.25 per cent and Nifty50 up by 1.2 per cent. The stock that showcased dramatic gains was Jet Airways as it gained nearly 121.97 per cent!

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.