Lok Sabha Question No. 1312 (UNSTARRED), answered on 2020-09-19
Subject: Disinvestment Target
Ministry: FINANCE
Asked by: K. Shanmuga Sundaram, P. Velusamy, Kunhalikutty P.K.

## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE

## DEPARTMENT OF INVESTMENT AND PUBLIC ASSET MANAGEMENT

## LOK SABHA

## UNSTARRED QUESTION No. 1312

TO BE ANSWERED ON SATURDAY, SEPTEMBER 19, 2020 Bhadrapada 28, 1942 (Saka)

## Disinvestment Target

## 1312. SHRI SHANMUGA SUNDARAM K.:

SHRI VELUSAMY P.:

SHRI P.K. KUNHALIKUTTY:

Will the Minister of FINANCE be pleased to state:

- (a) whether  it  was  reported  that  the  Government  will  recommend  loss  making  PSUs identified for strategic stake sale for closure and will not wait endlessly and won't make repeated attempts to get a bidder and if so, the reaction of the Government in this regard;
- (b) the  details  of  steps  being  taken  regarding  the  assets  of  the  PSUs  and  the  fate  of  the employees, if the PSUs were closed abruptly without any bidder to revive?
- (c) the number and details of companies or PSUs that were identified/proposed/cleared for disinvestment along with the reasons therefor and the estimated revenue therefrom and the period of pending disinvestment;
- (d) the details of disinvestment target of companies/PSUs set by the Government along with the manner in which the Government will achieve the target of disinvestment; and
- (e) whether it is a fact that Government is planning FDI in Defence productions and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) & (c) The Government follows a policy of disinvestment through minority stake sale and Strategic  disinvestment. Strategic  Disinvestment  implies  substantial  sale  of  Government shareholding  of  a  CPSE  along  with  transfer  of  management  control.  Policy  of  strategic disinvestment applies to the CPSEs, which are not in 'priority sector'.  For this purpose NITI Aayog  has  been  mandated  to  identify  such  CPSEs  based  on  the  criteria  of  (i)  National

Security; (ii) Sovereign function at arm's length; and (iii) Market Imperfections and Public Purpose.  Profitability and loss are not among the relevant criteria.

Strategic  disinvestment  of  CPSEs  is  being  guided  by  the  basic  economic  principle  that Government should discontinue in sectors, where competitive markets have come of age and economic potential of such entities may be better discovered in the hands of strategic investor due  to  various  factors  such  as  infusion  of  capital,  technological  upgradation  and  efficient management practices; and would thus add to the GDP of the country.

The government has given 'in-principle' approval for strategic disinvestment of 34 CPSEs, including subsidiaries and Units of CPSEs.  List of CPSEs, including subsidiaries and Units of CPSEs for which Government has given 'in-principle' approval, is given at Annexure - I.

In certain other CPSEs, policy of minority stake sale without transfer of management control through  various  SEBI  approved  methods,  is  being  followed  in  order  to  unlock  the  value, promote  public  ownership  and  higher  degree  of  accountability.  The  various  modes  of disinvestment  commonly  used  for  minority  stake  sale  includes  Initial  Public  Offer  (IPO)/ Follow  on  Public  Offer  (FPO),  Offer  for  Sale  (OFS),  Buyback  of  shares  and  Exchange Traded Funds (ETF).

Transaction  receipts  on  conclusion  of  disinvestment  transactions  depend  on  the  prevailing markets conditions and investors' interest.

Government  also  follows  a  policy  of  closure  of  CPSEs  in  terms  of  the  approved  revised guidelines dated 14.06.2018  issued  by  the Department  of  Public  Enterprises  (DPE). Government may consider closure of the CPSE even in cases earlier approved for strategic disinvestment on a case to case basis.

(b) The guidelines dated 14.06.2018 issued by Department of Public Enterprises on closure of CPSEs addresses the concerns regarding employees and assets.

(d) The Budget Estimate (BE) of disinvestment receipts  for 2020-21 from disinvestment of CPSEs  was  fixed  at  Rs.  1.20  lakh  crore.  For  disinvestment  of  Government  stake,  various modes  of  disinvestment  are used,  on  a case  to case basis, which  include  Strategic Disinvestment, Initial Public Offer (IPO)/ Further Public Offer (FPO), Offer for Sale (OFS) and Buyback of shares.

(e)  FDI Policy with regard to Defence Industry is available on the website of Department for Promotion of Industry and Internal Trade (DPIIT) at htpps://dipp.gov.in .

## Annexure-I

## List of CPSEs, including subsidiaries and Units of CPSEs for which Government has given 'in-principle' approval for strategic disinvestment.

## a) Transactions Completed

|   S.No. | Name of CPSE                                       |
|---------|----------------------------------------------------|
|       1 | Hindustan Petroleum Corporation Limited            |
|       2 | Rural Electrification Corporation Limited          |
|       3 | HSCC(India) Limited                                |
|       4 | National Projects construction corporation Limited |
|       5 | Dredging Corporation of India Limited              |
|       6 | THDC India Limited                                 |
|       7 | North Eastern Electric Power Corporation Limited   |
|       8 | Kamrajar Port Limited                              |

## b) Transactions halted as the CPSEs recommended for closure

|   9. | Hindustan Fluorocarbons Limited (subsidiary)   |
|------|------------------------------------------------|
|   10 | Scooters India Limited                         |
|   11 | Bharat Pumps &Compressors Limited              |
|   12 | Hindustan Prefab Limited                       |

## c) Transactions held up due to litigation

|   13. | Hindustan Newsprint Limited (subsidiary)       |
|-------|------------------------------------------------|
|    14 | Karnataka Antibiotics &Pharmaceuticals Limited |

## d) Ongoing Transactions

|   S.No | Name of CPSE                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|     15 | Project &Development India Limited                                                                                                                |
|     16 | Engineering Project (India) Limited                                                                                                               |
|     17 | Bridge and Roof Co. India Limited                                                                                                                 |
|     18 | Units of Cement Corporation of India Limited                                                                                                      |
|     19 | Central Electronics Limited                                                                                                                       |
|     20 | BEML Limited                                                                                                                                      |
|     21 | Ferro Scrap Nigam Limited (subsidiary)                                                                                                            |
|     22 | Nagarnar Steel Plant ofNMDC Limited                                                                                                               |
|     23 | Alloy Steel Plant, Durgapur; Salem Steel Plant; Bhadrawati Steel Plant - units of Steel Authority of India Limited                                |
|     24 | Pawan Hans Limited                                                                                                                                |
|     25 | Air India and five of its subsidiaries                                                                                                            |
|     26 | HLL Lifecare Limited                                                                                                                              |
|     27 | Indian Medicines Pharmaceuticals Corporation Limited                                                                                              |
|     28 | Various Units of India Tourism Development Corporation Limited                                                                                    |
|     29 | Hindustan Antibiotics Limited                                                                                                                     |
|     30 | Bengal Chemicals &Pharmaceuticals Limited                                                                                                         |
|     31 | (a) Bharat Petroleum Corporation Ltd(except Numaligarh Refinery Limited) (b) BPCL stake in Numaligarh Refinery Limited to a CPSE strategic buyer. |
|     32 | The Shipping Corporation of India Limited                                                                                                         |
|     33 | Container Corporation of India Limited                                                                                                            |
|     34 | Neelachal Ispat Nigam Limited                                                                                                                     |