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New Delhi: The decision of the <keyword id="20330004" type="General" weightage="100" keywordseo="Defence-Acquisition-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="Defence Acquisition Council" meta.hostid="261" meta.entityid="Defence Acquisition Council">Defence Acquisition Council</keyword> (DAC) to accept 10 <keyword id="22515789" type="General" weightage="20" keywordseo="capital-acquisition" source="keywords">capital acquisition</keyword> proposals worth Rs 1.4 trn will not only boost <keyword id="23034601" type="General" weightage="20" keywordseo="domestic-defence-manufacturing" source="keywords">domestic defence manufacturing</keyword> but will contribute to the growth of the <keyword id="20362868" type="General" weightage="20" keywordseo="PSU-companies" source="keywords">PSU companies</keyword> in the defence sector, highlighted a report by Antique Stock Broking. The report noted that the growth of domestic defence manufacturing in the country has picked up significantly over the last few years and is expected to grow further in the future. It added that the government's focus on enhancing domestic capabilities is evident from its initiatives in FY24, where Acceptance of Necessity (AoN) was accorded to proposals worth approximately Rs 3.61 trillion under various capital procurement categories. These initiatives are in line with the Defence Acquisition Procedure (DAP) 2020, which strongly promotes domestic manufacturing. "The government, in FY24, accorded Acceptance of Necessity (AoN) to proposals worth approximately INR 3.61 trn under various categories of capital procurement, which promotes domestic manufacturing as per DAP-2020" said the report. A significant milestone highlighted in the report is the remarkable increase in the share of domestic procurement in India's defence sector. The share has improved from 54 per cent in FY19 to 75 per cent in FY24. The report noted that this trend is expected to strengthen further, driven by the fact that more than 99 per cent of the announced proposals are to be sourced from the domestic industry under the "Buy (Indian)" and "Buy (Indigenously Designed, Developed, and Manufactured)" categories. "The total share of domestic procurement has seen a phenomenal improvement from 54% in FY19 to 75% in FY24 and is expected to improve further. The report stated that the DAC's (Defence Acquisition Council) approval of proposals worth Rs 1.45 trillion is aimed at enhancing the operational capabilities of the Indian Armed Forces. The report further emphasizes that with Rs 1.45 trillion worth of projects already approved in the year-to-date FY25, the <keyword id="20994345" type="General" weightage="20" keywordseo="defence-PSUs" source="keywords">defence PSUs</keyword> are poised for strong growth in the near to long term. "With approval for Rs 1.45 trn worth of projects in YTDFY25, we believe defence PSUs have strong growth opportunities in the near to long term" the report added. The Defence Acquisition Council (DAC), under the chairmanship of Defence Minister Rajnath Singh on Tuesday accorded Acceptance of Necessity (AoN) for 10 capital acquisition proposals amounting to Rs 1,44,716 crore. Of the total cost of AoNs, 99 per cent is from Indigenous sources under the Buy (Indian) and Buy (Indian-Indigenously Designed Developed and Manufactured) categories, the Ministry of Defence stated. For the modernisation of the tank fleet of the Indian Army, the proposal for procurement of Future Ready Combat Vehicles (FRCVs) has been cleared. The FRCV will be a futuristic Main Battle Tank with superior mobility, all-terrain ability, multilayered protections, precision and lethal fires over and real-time situational awareness, the release stated. The AoN was also accorded for procurement of Air Defence Fire Control Radars, which will detect and track aerial targets and provide firing solutions. The proposal has also been approved for Forward Repair Team (Tracked) which has suitable cross-country mobility for carrying out in-situ repair during mechanised operations.

DAC capital acquisition of Rs 1.4 trn to boost defence PSUs: Report

The government has sought data on vacancies from all public sector undertakings (PSUs) and asked them to prepare a roadmap to fill those with an aim to reducing unemployment in the country. Information has been sought by the government regarding vacancies at the entry-level as well as at the senior level, a senior official of a PSU told PTI. The move comes against the backdrop of opposition parties raising concerns over rising unemployment in the country. As per the direction, identified entry-level vacancies till December this year are required to be filled by August-September next year, the official said. Filling vacancies in government institutions takes time as appointments are made in a transparent manner by following specified guidelines, the official said, adding tests and interviews are conducted based on the advertisement that specifies eligibility criteria. Each stage consumes time as aspirants across the country participate in the process, the official said.As per the official data, there were 255 Central Public Sector Enterprises (CPSEs) operating in the country at the end of FY21. Out of the 255 CPSEs, 177 are profit-making and have generated a profit of Rs 1.89 lakh crore during FY21. Last month, the finance ministry convened a meeting with heads of public sector banks and financial institutions to take stock of the employment situation in these entities and their monthly recruitment plan. The total employee strength of public sector banks peaked at 8.86 lakh during 2012-13. It declined to 7.80 lakh during 2020-21.Banks have started issuing advertisements for recruitment. For example, the country's biggest lender <keyword id="6354731" type="General" weightage="80" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> (<keyword id="13222" type="General" weightage="80" keywordseo="sbi" source="Orion">SBI</keyword>) recently issued advertisements for the recruitment of 1,673 probationary officers. Prime Minister <keyword id="6354477" type="General" weightage="80" keywordseo="narendra-modi" source="Orion">Narendra Modi</keyword> in June had asked various government departments and ministries to undertake the recruitment of 10 lakh people on a "mission mode" in the next one-and-a-half-year amid the opposition's frequent criticism on the issue of unemployment. The direction from the Prime Minister came following a review of the status of human resources in all government departments and ministries. The vacancies are likely to be filled before the next general elections to be held in 2024.Earlier this year, the government had said in Parliament that there were about 8.72 lakh posts vacant in various Central government departments as of March 1, 2020. The <keyword id="6355455" type="General" weightage="80" keywordseo="indian-railways" source="Orion">Indian Railways</keyword>, being the biggest recruiter in the country, has nearly 2.3 lakh posts vacant. A month after the Prime Minister's announcement, the Department of Personnel and Training (DOPT) constituted a task force to implement the plan and execute it in mission mode. India's unemployment rate dropped to 6.43 per cent in September due to an increase in labour participation in the rural and urban areas, according to data from the Centre for Monitoring Indian Economy (CMIE).During August, India's unemployment rate surged to a one-year high of 8.3 per cent as employment sequentially fell by 2 million to 394.6 million. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indians-above-40-are-feeling-younger-healthier-than-gen-z-millennials-report/articleshow/94918231.cms">Indians above 40 are feeling younger &amp; healthier than Gen Z, millennials - report</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/20-allocation-in-gold-etf-a-better-investment-strategy-quantum-amc/articleshow/94916480.cms">20% allocation in gold ETF a better investment strategy: Quantum AMC</a>

Govt seeks data on vacancies from PSUs; roadmap to fill them

By <keyword id="13186635" type="General" weightage="20" keywordseo="shripal-lakdawala" source="Orion">Shripal Lakdawala</keyword>, <keyword id="13186636" type="General" weightage="20" keywordseo="jatan-shah" source="Orion">Jatan Shah</keyword> and Aashni Shah Even after 6 years of the government providing an ‘in-principle’ approval for strategic disinvestments of 36 of its public sector undertakings (‘PSUs’), the affairs remain in a torpid state. The proposal for such disinvestment was made to ensure reduction of financial burden on the government, elevate the use of technology and thus expand the overall business of the PSUs. However, only 8 out of 36 PSUs have successfully completed their disinvestment procedures and leveraged on the participation of private players. A large chunk of PSUs are still either in the process or haven’t even initiated the process of disinvestment. The ministry of finance, government of India, announced the policy of strategic disinvestment on 1 February 2021 to fulfil the government’s commitment under the Aatmanirbhar Bharat package. Through this policy, the government aims to sell a substantial portion of its stake in the PSUs and use the proceeds to finance various social sector and development programmes. In cases where there is a sale of the entire or even majority of the stake in PSUs, the decision-making power and the control of the companies will shift to a private player. Majority of the PSUs for which strategic disinvestment is proposed are loss making companies i.e., these companies have historically carried forward tax business losses, which are allowed to be carried forward for a period of 8 years under the Income-tax Act, 1961 (‘the Act’). Any potential buyer of these PSUs would want to utilise such losses and set it off against any future income generated by the company. Such losses play a crucial role in determining the value for such loss-making companies. <cmsannotation type="cmsannotation" annotationid="Current scenario" comment="subhead" text="Current scenario">Current scenario</cmsannotation> Currently, section 79 of the Act provides that in case of certain companies, the existing business losses shall lapse on account of a change in shareholding by more than 49%. Accordingly, if the government proposes to sell a stake in PSUs which are not listed or are not held by any listed entity and are not acquired by a listed entity, then in such a scenario, changes in shareholding by more than 49% will lead to a lapse of the existing tax business losses of the PSUs. <cmsannotation type="cmsannotation" annotationid="Proposed amendment" comment="subhead" text="Proposed amendment">Proposed amendment</cmsannotation> In order to facilitate the disinvestment of the PSUs, Budget 2022 proposes to exempt the erstwhile PSUs (i.e., the PSUs in which strategic disinvestment is made by the government), from the provisions of section 79, subject to the condition that the ultimate holding company of the erstwhile PSUs after the completion of strategic disinvestment, continues to hold, directly or indirectly through its subsidiaries, at least 51% of the voting power of such company in aggregate. <cmsannotation type="cmsannotation" annotationid="Is this enough to get the wheels rolling?" comment="subhead" text="Is this enough to get the wheels rolling?">Is this enough to get the wheels rolling?</cmsannotation> In Union Budget 2021, a similar relief was granted for amalgamation of PSUs. Further, clarificatory notification in this regard was issued by the Central Board of Direct Taxes ('CBDT') in September 2021, which is now being formalised by proposing an amendment under the relevant provisions of the act. The previous amendment coupled with the proposed amendment, ensures that there is no lapse on account of carried forward tax losses. While this amendment provides a major relief to the loss-making PSUs which are proposed to be acquired by private sector undertakings, there are a few other requests as well from the industry, to make acquisitions of PSUs lucrative from a tax perspective. Exemption of TDS [tax deducted at source] and TCS [tax collected at source] on such transactions, exemption from obtaining ‘no-objection’ certificates from the tax department, exemption on capital gains on sale of PSUs’ shares and deemed gift taxation on acquisition at a lower valuation, are the few requests from the industry. While there were several expectations from this Budget, only one has been addressed. The proposal in Finance Bill 2022 is a welcome move not only for PSUs which are in the process of disinvestment, but will also speed up upcoming disinvestments. Shripal Lakdawala is Partner, Deloitte India; Jatan Shah is Senior Manager with Deloitte Haskins and Sells LLP; and Aashni Shah is Deputy Manager with Deloitte Haskins and Sells LLP

OPINION: Indian government is still oiling the wheels for disinvestment of PSUs

There are good companies, there are bad companies, and then there are companies like <keyword id="6367143" type="General" weightage="100" keywordseo="lic" source="Orion">LIC</keyword> or SBI. They are like that friend who isn’t the coolest, but they are the only ones available when you need them. Much like <keyword id="13189155" type="General" weightage="20" keywordseo="rajesh-koothrappalli" source="Orion">Rajesh Koothrappalli</keyword> a.k.a <keyword id="6371883" type="General" weightage="80" keywordseo="raj" source="Orion">Raj</keyword> from the hit sitcom ‘The <keyword id="506666" type="General" weightage="20" keywordseo="big-bang-theory" source="Orion">Big Bang Theory</keyword>’. <div type="image" title="Rajesh Koothrappalli from The Big Bang Theory" msid="89621657" hostid="261"></div> Whether it was lifting Sheldon’s girlfriend Amy when she was in self doubt, or giving Bernadette the confidence to be a mother, or rallying alongside the creepy Howard through all the histrionics, Raj was always the friend in times of need. That’s been the relationship between millions of Indians and the Life <keyword id="35450" type="General" weightage="20" keywordseo="insurance" source="Orion">Insurance</keyword> Corporation of India, the state-owned giant that sold three out of every four life policies in India. From when no one cared for insurance to now, when the demand is relatively better. <div type="image" title="Big ol&amp;#39; LIC is about to hit the market in the next few weeks" msid="89621699" hostid="261"></div> Every time the government wanted a share sale to be a success, there was LIC waiting with its coffers open buying out shares that didn’t have too many other takers. But that’s history. Investing in a company should be a call on the future. And, for LIC, that looks pretty rosy too. There are just too many Indians who are yet to get life insurance and that means <a href="https://www.businessinsider.in/personal-finance/news/these-are-discounts-and-perks-for-lic-policyholders-will-get-while-applying-for-the-ipo/articleshow/89585424.cms">there’s a lot of money to be made</a>. Betting on the biggest player in a sector is a fairly safe thing to do. These are some of its strengths that make LIC’s IPO so hot. It has over a million agents who have sold over 283 million policies. It returns more profit for every rupee invested than any other life insurer in the world. This one company manages more money than the entire mutual fund industry in India. And, when it gets listed on the stock exchanges, it will be bigger than most companies in India, by a mile. There are many strengths that make LIC attractive and its public issue the mother of all IPOs in India. While everyone is queueing up for the celebrations, we thought why not bring, to the fore, some challenges that LIC faces because that’s also something you should know about before investing. <div type="image" title="LIC IPO poll" msid="89621840" hostid="261"></div> Like Raj, LIC will carry its parent’s baggage It’s a government company and not all its decisions are geared towards making a bigger/quicker profit. Much like the fuel retailers in India or the state-owned banks, political priorities often shroud over what’s ideal for the business. Both Raj and LIC refuse to grow up Like most Indian companies owned by the government, LIC is neither very tech-savvy nor is it famous for great service to policyholders. Here, the comparison is not with Raj, the physicist, but with his inability to come of age. He just went from a creep to a likeable creep. Here’s a sample complaint. LIC still deals in cheques and the drop box doesn’t even open for 20 straight days. <a href="https://twitter.com/Adityamehriwal/status/1493117135174127617">https://twitter.com/Adityamehriwal/status/1493117135174127617</a> This sarkari service would explain why more people drop out of an LIC policy after the first year. More than any other life insurance company in India. <div type="image" title="Number of people who renew policy after the first year" msid="89621903" hostid="261"></div> LIC isn’t an underdog like Raj, but it isn’t a go-getter either Insurance is a lot more competitive as a business than it used to be. LIC is still the giant, towering over all others in the space, but slowly and steadily, private insurers are eating into the pie. <div type="image" title="Combined market share and premium growth" msid="89621935" hostid="261"></div> Promoting yourself is necessary when you’re faced with tough competition. However, like Raj, LIC doesn’t do that very often. The number of LIC ads you’ll see is a lot less than some of the other players who splurge on advertising. It doesn’t matter what experts say about LIC’s prospects, it seems like the entire country wants a piece of the pie. If you’re one of them, ask yourself why you are excited. <div type="image" title="Here’s what you should know before you go for LIC IPO" msid="89621992" hostid="261"></div>

SIMPLY PUT: LIC is like Raj from Big Bang Theory

New Delhi, Oil sector public sector undertakings (PSUs) may have to bear a <keyword id="9705803" type="UNKNOWN" weightage="20" keywordseo="larger-share">larger share</keyword> of <keyword id="10488841" type="UNKNOWN" weightage="20" keywordseo="additional-dividend-payment">additional dividend payment</keyword> to the government this year with almost all companies falling behind on their capex plan for the current fiscal. As of November, the capex of PSU oil companies put together stands at ₹46,303 crore, less than 50% of the annual target of ₹98,522 crore. The government has asked companies to complete at least 75% of capex till the end of December quarter. But this looks highly unlikely now pushing the case for higher dividend payout. In meetings with PSUs, Finance Minister Nirmala Sitharaman had stressed on the need for PSUs to step up <keyword id="6355120" type="UNKNOWN" weightage="20" keywordseo="investment">investment</keyword> during the time of the pandemic to boost overall sentiments and kickstart investment climate in the country. She had specifically urged companies to complete at least 75% of capex target by December-end and more than 100% by March. "It is a double whammy for PSUs now. They have to cough up more either through investments or through payment of additional dividends. It should also be seen that the companies are finding it difficult to meet capex targets given financial and project implementation constraints. Covid has severely dented demand and slowed project implementation. Consequently, there is already a strain on their resources that would get heightened as additional dividend would have to be paid," said a top official of a PSU, asking not to be named. While almost all PSUs are facing delays and difficulties in stepping up the gas and increasing investments, the situation among companies in the oil and gas sector looks worse. Slow demand conditions in early part of the year resulted in slowing of several capex plans. Though the situation has improved from November onwards, still its a long way to go for normalcy to return in the sector. For the government, oil sector PSUs are also set to make big inventory gains due to firming up of crude prices, and hence they are being looked at for higher interim dividend or special dividend and a few may also be considered for share buyback depending on market conditions. Among the oil and gas PSUs, the worse performer in terms of capex spend is the country's largest oil and gas explorer ONGC and largest public sector refiner <keyword id="6356834" type="DOMAIN" weightage="20" keywordseo="indian-oil-corporation">Indian Oil Corporation</keyword>. According to oil ministry's <keyword id="819806" type="COMPANY" weightage="20" keywordseo="Petroleum-Planning-and-Analysis">Petroleum Planning and Analysis</keyword> Cell (PPAC), while ONGC had completed just ₹14,959 crore worth of capex upto November out of FY21 investment target of ₹32,502 crore, IOC's capex upto November is ₹12,104 crore against annual target of ₹26,233 crore. Similarly, HPCL has completed capex of ₹5,658 crore (upto November) against target of ₹11,500 crore; Gail India - ₹2,614 crore against annual target of ₹5,412 crore; Oil India - ₹2,136 crore vs ₹3,877 crore target; MRPL - ₹631 crore vs ₹1,150 crore, OVL - ₹3,765 crore vs ₹7,235 crore. Among the worst performer on capex is privatisation-bound <keyword id="155363" type="DOMAIN" weightage="20" keywordseo="Bharat-Petroleum-Corporation-Ltd">Bharat Petroleum Corporation Ltd</keyword> (BPCL) which has spent just ₹3,716 crore against target of ₹9,000 crore. Officials sources said that PSUs with stock prices higher than the book value and who have sufficient cash funds may also be asked to shell higher dividend in FY21. A call will be taken after the third quarter results of companies are declared late January or early February next year. With the central government being the largest shareholders in PSUs, higher dividend would largely help it to fill its coffers at a time when revenue is constrained due to a overall fall in economic activity during the pandemic while expenditure has risen sharply. Dividend from non-financial PSUs have been budgeted at ₹65,747 crore in FY21. Any increase in this will give a boost to non-tax revenue of the government and help its bridge the rising fiscal deficit that as per initial estimate is now pegged close to 8% of GDP. Finance Minister Nirmala Sitharaman and her predecessors, including the late Arun Jaitley and P. Chidambaram, had maintained the policy of advising non-financial state-owned companies that if they are not utilising their cash reserves for capex needs, they should give it to the Centre through dividends or share buybacks. As per the guidelines issued by disinvestment department DIPAM, every CPSE is required to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher. Apart from oil sector, several PSUs in power and mining space have completed just about 40% annual capex by November due to constrained business environment. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-mrs-bectors-ril-bharti-airtel-vodafone-idea-ilfs-interglobe-aviation-future-group-deepak-nitrite-jubilant-foodworks-and-others/articleshow/79933826.cms">Top stocks to watch – Mrs Bectors, RIL, Bharti Airtel, Vodafone Idea, IL&amp;FS, InterGlobe Aviation, Future Group, Deepak Nitrite, Jubilant FoodWorks, and others</a> <a href="https://www.businessinsider.in/thelife/personalities/news/from-taking-on-yahoo-to-being-tamed-by-chinas-communist-party-its-been-a-roller-coaster-decade-for-jack-ma/slidelist/79935613.cms">From taking on Yahoo to being tamed by China’s Communist Party— it’s been a roller coaster decade for Jack Ma</a> <a href="https://www.businessinsider.in/careers/news/ey-is-looking-to-hire-9000-techies-in-2021-to-boost-its-digital-services/articleshow/79936576.cms">EY is looking to hire 9,000 techies in 2021 to boost its digital services</a>

Revenue constrained government may push oil PSUs short on FY21 capex to pay higher dividend

<ul><li><keyword id="1402930" type="General" weightage="50" keywordseo="state-discom" source="Orion">State discom</keyword> legacy dues to <keyword id="3278843" type="General" weightage="80" keywordseo="gencos" source="Orion">gencos</keyword> have more than halved from ₹1.38 lakh crore last June last year to ₹61,000 crore as of 24 July 2023.</li><li>This was due to the introduction of a late payment scheme which penalizes discoms for delaying payments.</li><li><keyword id="14181100" type="General" weightage="50" keywordseo="green-energy-open-access-rules" source="Orion">Green Energy Open Access Rules</keyword> also reduced the minimum offtake threshold for consumers.</li><li>Commercial &amp; industrial consumers can also demand green power from state discoms voluntarily. </li></ul>India’s green power generators have been gaining from increased payment discipline amongst state distribution companies or discoms after the government introduced late payment surcharge scheme (LPS) last year. That’s good news for renewable power generators like Greenko, ReNew, <keyword id="45417" type="General" weightage="50" keywordseo="adani-power" source="Orion">Adani Power</keyword> and more who will now be assured of faster payments. The scheme has made good progress with payment discipline amongst state distribution companies as state discom legacy dues to gencos have more than halved from ₹1.38 lakh crore in June last year to ₹61,000 crore as of 24 July 2023, says a report by CreditSights. Also, Power Finance Corporation (PFC) and <keyword id="64468" type="General" weightage="50" keywordseo="rural-electrification-corporation" source="Orion">Rural Electrification Corporation</keyword> (REC) have been funding various state governments to help clear these dues. In the last one year, both these public sector companies (PSUs) have given multibagger returns to their investors — at 162% and 154% respectively. Most power generators with a renewable energy portfolio have also been gaining ground. What’s the scheme? As per the scheme, state discoms who delay their payments beyond the default trigger date, will lose short-term power access. Apart from that, progressively these restrictions would increase each month for medium and long-term power access as well for each month of non-payment. The scheme is a game changer for the renewable power generators who are stuck with large capex costs along with delayed payments. “It (the scheme) reduced the counterparty credit risks posed by the state discoms. Not only would the state discoms have to clear their sizable backlog of owed dues to the gencos, they would also be more disincentivized to delay payments to the gencos given the punitive penalties,” said the CreditSights report. Gencos who are able to receive timely payments can improve their account receivables, working capital positions and cash flows. “Investor sentiment in the sector has also improved materially post the LPS scheme, based on our discussions with market participants,” CreditSights observed. More green consumers In the Union Budget 21-22, eligible Indian states were granted additional borrowing limits of 0.25% - 0.5% of annual Gross State Domestic Product (GSDP). This was applicable over a four-year period from FY22-FY25. Some of these benefits have flowed to the state discoms. Till date, ₹66,400 crore of additional borrowing permissions have been granted to the states — for financial support to the state discoms, the report said. The government also came up with Green Energy Open Access Rules in June last year, which helped improve offtake of renewable power. It reduced the renewable energy minimum offtake threshold of consumers from 1 MW to 100 kW. It also allows commercial &amp; industrial consumers to demand green power on a voluntary basis from state discoms. It also provided clarity on final tariffs charged to consumers of renewable energy, bringing in more transparency into the system. These new rules will drive better transparency, access and stronger demand for renewable energy across the smaller C&amp;I customers, CreditSights opines. The Indian government has set an ambitious target to convert 40% of total installed power capacity green by 2030. That means India would have to add 250 GW of renewable energy capacity between 2023-2027 – and it has been working actively to clear bottlenecks along the way, most of which is ensuring these green power producers are paid on time.

Indian green power generators are gaining from more takers & timely payments

<ul><li>The Indian government is selling one of its profitable oil companies – <keyword id="75662" type="CITY" weightage="20" keywordseo="Bharat-Petroleum">Bharat Petroleum</keyword> Corporation Limited. </li><li>The government will sell 53.29% stake in <keyword id="44555" type="CITY" weightage="20" keywordseo="BPCL">BPCL</keyword> to a strategic buyer, also giving up management control in the oil giant.</li><li>The Numaligarh Refinery in Assam will be carved out of the divestment, said Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword>. </li></ul>The Indian government announced the divestment of five public sector undertakings (<keyword id="44880" type="CITY" weightage="20" keywordseo="PSUs">PSUs</keyword>), including that of Bharat Petroleum Corporation Limited. The others in line to be divested out of government control are Shipping Corporation of India, Container Corporation of India (CONCOR), THDC India and North Eastern Electric Power Corporation Limited (NEEPCO) The government will be selling its 53.29% stake in BPCL to a strategic buyer, also giving up management control of the oil retailer. However, the Numaligarh Refinery in Assam which is a part of BPCL, will be carved out of the divestment, said Finance Minister Nirmala Sitharaman. Mixed reaction from the public The government’s decision to sell one of the few profitable PSUs has seen mixed reactions from the public. BPCL had reported profits of ₹7,132 crore along with total sales worth ₹3.37 trillion in the last financial year. “This govt is now selling off the country's most profitable companies as well. This is a loot,” said Congress leader KC Venugopal today. The shares of BPCL too fell on Thursday morning to ₹532. However, BPCL also makes for an attractive sale unlike Air India which is still awaiting investor interest. A good sale will help Indian government meet its ambitious disinvestment target of ₹1.05 lakh crore for the current fiscal year. “It would also increase the free float available in the market which may have positive impact on Foreign Portfolio Investments in Indian capital markets and in the creation of wider investment space for retail and institutional investors and may increase in the market premium of CPSEs due to likely positive investors perception,” said the government’s press release. Started as the Rangoon Oil and Exploration company during the British rule, BPCL changed many hands and was finally purchased by the government at market price in 1976. Today, the BPCL has a capacity of 37 million tonnes per annum. It also has over 15,000 retail outlets in India.

BPCL divestment opens up to mixed reactions, but the company’s shares takes a hit

New Delhi, Nov 21 () Oil Minister Dharmendra Pradhan on Thursday hinted that public sector firms such as Indian Oil Corporation (IOC) may not be allowed to bid for buying government stake in Bharat Petroleum Corporation Ltd (BPCL), for which a buyer may have to shell out as much as Rs 90,000 crore.
 The Cabinet Committee on Economic Affairs had on Wednesday decided to sell the government's entire stake in the country's second-largest state refiner BPCL and India's largest shipping company Shipping Corporation of India (SCI). It also approved privatisation of Container Corporation of India while also giving nod to paring stake below 51 per cent in select public sector undertakings but without losing control.
 "Since 2014, we have a clear vision that the government has no business to be in business," Pradhan told reporters here. "We have examples of 2-3 sectors such as telecom and aviation where ushering in private participation has led to customers benefiting from price cuts, efficiency, and better service. And yesterday (on Wednesday), several reformist decisions were taken."
 BPCL will give buyers ready access to 14 per cent of India's oil refining capacity and about one-fourth of the fuel marketing infrastructure in the world's fastest-growing energy market.
 It, however, will be sold after carving out Numaligarh Refinery from its portfolio and given to a pubic sector unit.
 "Numaligarh refinery was set up as per Assam Accord and it will remain a public sector unit. Assam Chief Minister had requested Prime Minister (Narendra Modi) to retain public sector character of Numaligarh Refinery and that has been accepted," he said.
 Pradhan, however, did not say if IOC or Oil India Ltd, which already has a stake in the refinery and also supplies crude oil to it, will take over the unit.
 "The details have to be worked out," he said. "Finance Minister (Nirmala Sitharaman) has stated that the privatisation of BPCL will happen this fiscal and we hope to adhere to the timeline."
 Asked if public sector units will be allowed to bid for the government's 53.29 per cent stake, he said: "Nitty gritty and details of the disinvestment process will have to be worked out but when I say the government has no business to be in business, it is indicative of possible future course of action."
 At the current trading price of BPCL, the government's 53.29 per cent stake is valued at a shade less than Rs 62,000 crore. On top of this, the acquirer will have to make an open offer to buy an additional 26 per cent stake from minority shareholders for about Rs 30,000 crore.
 Last year, the government had sold its entire stake in Hindustan Petroleum Corp Ltd (HPCL) to state-owned Oil and Natural Gas Corp (ONGC) for Rs 36,915 crore.
 Pradhan said the privatisation of BPCL was following the policy of ushering in greater competition in sectors that can sustain on their own.
 Greater private participation, like in the telecom and aviation sector, will bring about efficiencies and better service to consumers, he said.
 The CCEA had on Wednesday also approved the sale of an entire 63.75 per cent government holding in SCI and 30.8 per cent out of the government's 54.80 per cent stake in Container Corp of India (Concor).
 Besides, the government will sell its entire holding in THDC India Ltd (THDCIL) and North Eastern Electric Power Corp Ltd (NEEPCO) to state-owned power generator NTPC Ltd, the finance minister has said.
 The government holds 74.23 per cent in THDCIL and 100 per cent NEEPCO.
 Parallelly, the Cabinet had also approved reducing government stake in select PSUs such as IOC to below 51 per cent while continuing to retain management control.
 The management control will continue to be retained with the government after considering equity held by other state-owned companies in the divested firm.
 The government, currently, holds 51.5 per cent in IOC and another 25.9 per cent through state-owned Life Insurance Corp of India (LIC), and explorers ONGC and Oil India Ltd (OIL), and the government can potentially sell 26.4 per cent for about Rs 33,000 crore.
 A similar formula can also apply to ONGC and gas utility GAIL India Ltd.
 The stake sales are critical for the government to meet its disinvestment target of Rs 1.05 lakh crore set for the current financial year.
 At current prices, the government's 30.8 per cent stake in Concor is worth about Rs 10,800 crore, while stake sale in SCI will fetch just over Rs 2,000 crore.
 BPCL operates four refineries in Mumbai, Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes. After removing three million tonnes capacity of the Numaligarh refinery, the new buyer will get 35.3 million tonnes of refining capacity.
 It also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG (liquefied petroleum gas) bottling plants. The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year and has more than a fifth of the 250 aviation fuel stations in the country.
 The government is keen to get international energy majors such as Saudi Aramco, Total SA of France and ExxonMobil to operate in the downstream fuel marketing business so as to bring in greater competition.
 Currently, 95 per cent of retail petrol and diesel sales and near 100 per cent of cooking gas (LPG) and kerosene sales are controlled by the public sector units.
 As on March 31, BPCL reported cash and cash equivalents of around Rs 5,300 crore, against Rs 10,900 crore of debt maturing over the next 15 months. ANZ HRS

IOC, other PSUs not to bid for BPCL, hints Pradhan

Raipur, Feb 13 () Union Power Minister R K Singh on Thursday wondered why there is a movement in India against public sector units, which have laid the foundation of the country's growth. Speaking at the inaugural session of NTPC's 'Indian Power Station (IPS) 2020' conference being held here, Singh said NTPC is one of the principal foundations of the electricity system in our country. Because of this, we can ensure that power is available at all times in any part of the country and the price of power does not rise beyond reason, he said. The market itself is a good regulator but it can also lead to huge profit taking. So the market system is balanced by the presence of a strong PSU, he said. "For a long time there is movement against the public sector (undertakings). I have seen that because I have been in service for many years," the bureaucrat-turned-politician said. "Wherever I go I find that the public sector is occupying a large segment in different sectors, including power. Right now I will not talk about privatisation of Air India etc, but (when) I go abroad and I see that most of the airlines are owned by the governments," he said. "I don't know why there is a movement here in our country against public sector," Singh said, adding that PSUs have been responsible for laying the foundation of the growth of India. "When there was nothing there was public sector... We did not come here out of choice, we came here because there was nobody else. It does not mean when other people are setting up power plants the government has to exit. No, I don't believe that that is correct. "That is an aspect which I think we need to talk about and we need to say because there is a lobby out there (which) keeps talking against public sector and keeps talking about privatisation, which I don't support," he added. Speaking on the power sector, Singh said the government will not compromise with the basic goal of providing affordable energy to people, but will also take care of the environment. "The developed world (countries) have per capita income and per capita energy consumption more than our country... they are responsible for 95 per cent of the carbon load which is there in environment, not us," the minister said. "We are not going to shut our thermal power plants just because you (developed nations) have been polluting at some high rate... But as far as our responsibility towards environment is concerned, we definitely feel that we are responsible for keeping our emissions in check. That is why we have announced the target that by 2022, we will achieve 175 GW of renewable energy capacity and going on from there to 450 GW," he said. The minister also asserted that power plants flouting the environmental norms will be shut. TKP RSY ABMABM

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