HAL Among Indian PSUs Divestment Plans

Hindustan Aeronautics will be one of the Central Public Service Undertakings (CPSUs) which has been issued a notification from the Indian government for listing by March 2017.

The Department of Public Enterprises (DPE) has issued the notification for the listing. “The government’s focus is on listing HAL, Heavy Engineering Corporation, ONGC Videsh, RINL, Nuclear Power Corporation of India Ltd, BSNL, IREDA and Coal India subsidiaries,” Bloomberg quoted PSU officials as saying Tuesday.

The listing of PSUs is being perceived to instill a greater stability and prevent market fluctuations. Currently, only 43 of the 160 profit making CPSUs are listed.

A highly placed official in one of India’s energy ministries confirmed the development and said, “The listing of PSUs has been on the agenda of the government. The freshly issued directive by the DPE will allow easier access to capital, aiding expansion efforts.”

“Prime-facie, it does look like government is preparing for bigger disinvestment, to shore up fiscal resources. Even a small issuance, will ensure some price discovery for PSUs. With direct tax collection not growing versus budgeted tax collection, directionally it looks like a disinvestment standpoint,” Emkay Capital’s head of research for institutional equities, Dhananjay Sinha was quoted by the news channel.

Calling for a need to reform PSUs to make them lucrative for investors, Sinha said: “People are not chasing PSU stocks. Structural issues need to be addressed for PSU companies to be bought. We expect the listing to be marginal. But the PSU will be heavily influenced by the majority stake holder which will be the government.”