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    Categories: : Sectors

Disinvestment As Reforms: A Fresh Rs 13,000 Crore Target

The central government recently announced plans to sell shares of four public sector undertakings as part of its budget target of          Rs 30,000 crore.

 

The PSUs short-listed for share sale include trading company Metals and Minerals Trading Corporation, copper manufacturer Hindustan Copper, oil explorer Oil India and aluminium manufacturer National Aluminium Company.

 

IndiaSpend’s Sourjya Bhowmick looks at the financial details of the PSUs on some important parameters.

 

 

Metals and Minerals Trading Corporation

 

MMTC, established in 1963, is one of the two highest foreign exchange earners for India. It is also the largest international trading company of India and the largest non-oil importer in India.  Table 1 shows the balance sheet of MMTC over the last 10 years.

 

Table 1: MMTC

 

Year Turnover Net Profit/Loss Share Capital Capital Employed Manpower
(In No)
2011 65,929 121 100 NA NA
2010 68,855 216 50 NA NA
2009 36,821 140 50 856 188
2008 26,423 200 50 747 195
2007 23,302 127 50 589 200
2006 16,362 108 50 1,073 203
2005 15,124 107 50 783 206
2004 9,099 51 50 804 208
2003 6,226 25 50 511 216
2002 7,244 18 50 750 240
2001 5,302 12 50 825 245
2000 4,697 15 50 774 286

(Figures in Rs crore; Source: MMTC Limited )

 

Hindustan Copper

 

Hindustan Copper is under the Ministry of Mines, and was started on 9th November, 1967.  Its operations cover mining, beneficiation, smelting, refining and casting of refined copper into downstream saleable products.  Table 2 shows the balance sheet of HCL over the last 10 years.

 

Table 2: Hindustan Copper

 

Year Turnover Net Profit/Loss Share Capital Capital Employed Manpower (No)
2010-11 1,258 224 463 639 5,100
2009-10 1,430 155 463 585 5,300
2008-09 1,349 10 (-) 463 571 5,440
2007-08 1,840 246 463 657 5,405
2006-07 1,800 314 977 505 5,451
2005-06 1,054 106 949 247 5,583
2004-05 559 56 949 235 5,665
2003-04 519 56 (-) 909 215 5,995
2002-03 506 148 (-) 795 204 7,865
2001-02 605 184 (-) 710 249 9,502

(Figures In Rs crore; source: Hindustan Copper Limited)

 

As can be observed from the table, there were four years when HCL reported a loss.

 

OIL India

 

Oil India became a wholly-owned Government of India enterprise in 1981. It is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of liquid petroleum gas. Presently, it is one of the top 10 profit-making PSU. Table 3 shows the balance sheet of OIL over the last 10 years.

Table 3: OIL India

 

Year Turnover Net Profit/Loss Share Capital Capital Employed
2010-11 8,303 2,888 240 15,728
2009-10 7,905 2,610 240 13,019
2008-09 7,241 2,162 214 8,919
2007-08 6,082 1,789 214 7,393
2006-07 5,389 1,640 214 7,141
2005-06 5,550 1,690 214 5,917
2004-05 3,888 1,062 214 5,195
2003-04 3,145 9,497 214 4,573
2002-03 2,897 9,167 214 4,073
2001-02 1,896 525 214 3,326
2000-01 2,024 467 214 3,002

(Figures In Rs Crore: Source: Oil India )

 

National Aluminium Company

 

Nalco was incorporated in 1981 as a public enterprise. It is Asia’s largest integrated aluminium complex and its functions cover bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and port operations. Table 4 shows the balance sheet of Nalco over the last five years.

 

 

Table 4: National Aluminium Company

 

 

 

Year Turnover Net Profit/Loss Share Capital Capital Employed
2011-12 6,927 850 1,289 10,805
2010-11 6,370 1,069 1,289 8,798
2009-10 5,310 814 644 7,834
2008-09 5,531 1,272 644 6,628
2007-08 5,474 1,632 644 7,031

(Figures In Rs Crore; Source: NALCO)

 

The data prior to 2007-08 was not available. As can be seen, NALCO has never reported a loss for the last five years.

 


Can the target be achieved?


The main idea behind disinvestment for the government is to raise Rs 30,000 crore. Table 5 gives a sense about how much funds can be raised by the proposed stake sale and the share price of the companies as on September 14, 2012.

 

Table 5: Fund Raising Plan

 

PSU Govt To Divest ( as % of equity) Total Equity (Rs Cr) No. of Shares to be Divested ( In Cr) Last Traded Price (Sept 14, 2012) (In Rs) Funds That can be raised at last price (Rs Cr)
MMTC 9.33 100 9.27 778 7,212
Hindustan Copper 9.59 463 8.84 269 2,377
Oil India 10 601 4.72 486 2,293
Nalco 12.15 1,288 27.29 54 1,473
Total         13,355

 

Thus, out of the total budgeted target of Rs 30,000 crore, around 45%, i.e. Rs 13,355 crore, can be raised through the present plan.