DISINVESTMENT OF PUBLIC DISINVESTMENT OF PUBLIC SECTOR ENTERPRISES IN SECTOR ENTERPRISES IN

INDIAINDIA

Disinvestment – Defined

Disinvestment in a PSU

Government Policy Governing a PSU

Case on Disinvestment

3 P’s Of Disinvestment

Problems In a P.S.U

Objectives & Methods Of Disinvestment In India

Facts , Remarks & Suggestions

Neha Kumar - 64

Conversion of money or cash into either : -

Securities Bonds Debentures Or any other form of money

Neha Kumar - 64

Transfer of Ownership to the

Government when the dilution

is beyond 51 %

Imperative for the Government

to sell a part of its holdings

Neha Kumar - 64

Analyze the objective of Disinvestment process in India

Disinvestment Process viz-a-viz Budget Deficit

The VSNL Disinvestment Case

Core findings of the VSNL Case

Priti Kumari - 35

Price policy

Under utilization of capacity

Problem of proper planning &

execution

Problems with labour , personnel & management

Lack of autonomy 3 P’S OF ANY P.S.U

Priti Kumari - 35

Saurabh Shah - 48

Methods

Net Asset Method

Profit Earning Capacity Value

Method

Discounted Cash Flow Method

Government Policies

Bring down Govt equity to 26%

or lower

Restructuring of potential &

viable P.S.U

Close down P.S.U that can’t be

revived

Protect the interest of the

workers

Saurabh Shah - 48

Government had 52.97% stake

in V.S.N.L

Had a monopoly of all its

international long distance

services till 2004

Cash reserves & surplus of

more than Rs 6000 Crore

Had a net profit of over 800

Crore (1999 – 2000)

Had proposed to Disinvest 25%

of its share capital

Had a market capitalization of

Rs 10,000 Crore

Minimum market price of all

V.S.N.L shares would be

Rs 20,000 Crore

Rahul Vishwanath - 39

Government’s Strategy

Meet the growing budget

deficit

The Government knew that they

could make more money by

selling off their assets cheaply

Faster realization value

Megha Tandon - 24

No clear framework or policy

Disinvestment used to meet fiscal deficit

No transparency

Failure to attract foreign buyers

Dinkar Notani - 14

Clear policy & framework for disinvestment process

De-link disinvestment with budgetary control exercise

Disinvestment process be audited by at least 2 reputed auditing firms

Dinkar Notani - 14