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Nalco disinvestment deferred on valuation concerns; govt plans to sell equity in HAL

The government has deferred stake sale in state-run aluminium company Nalco after its poor second-quarter performance raised valuation concerns.

ET Bureau|
Nov 08, 2012, 05.37 AM IST
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The government has deferred stake sale in state-run aluminium company Nalco after its poor second-quarter performance raised valuation concerns.
The government has deferred stake sale in state-run aluminium company Nalco after its poor second-quarter performance raised valuation concerns.
NEW DELHI: The government has deferred stake sale in state-run aluminium company Nalco after its poor second-quarter performance raised valuation concerns, but it now plans to sell equity in Hindustan Aeronautics. “Nalco disinvestment will happen next quarter (January-March quarter).

It is deferred for now. There is need to strengthen the financial performance of the company further," Mines Minister Dinshaw Patel told reporters after a meeting of the empowered group of ministers (EGoM) on Wednesday.

Further discussion on Nalco disinvestment would happen again between January 7 and January 15, he said. Last month, the government had to defer the public issue of Rashtriya Ispat Nigam as the steel ministry felt that the issue price suggested by merchant bankers was less than the book value.

The finance ministry has now moved another proposal to maintain a healthy pipeline of offers to meet its disinvestment target ofRs 30,000 crore for the year. The Cabinet is expected to take up a proposal to sell 10% equity in HAL on Thursday, a government official said.

Disinvestment secretary Mohammad Haleem Khan said Nalco’s second quarter results were not representative of its value. “Q2 performance does not represent the intrinsic value. The merchant bankers said that Q2 is an aberration and Q3 is bound to be very good.

So after Q3, it (disinvestment) will be done,” Khan said. Enam Securities, SBI Caps and IDFC were acting as merchant bankers for the Nalco disinvestment. The 12.5% stake sale of Nalco was expected to fetch over Rs 1,500 crore to the exchequer at the current market price.

The finance ministry’s attempts to speed up disinvestment have not met with much success seven months into the year but the government is still hopeful of meeting the target.

“HCL (Hindustan Copper) disinvestment will be next, followed by NMDC and OIL (Oil India). We hope to garner Rs 12,000 crore through three issues by December end,” Khan said.

“We have scheduled large number of cases and they are in the pipeline. Things are getting difficult, but not impossible,”Khan said. “We are confident of meeting the Rs 30,000-crore disinvestment target,” he said.

The Cabinet Committee on Economic Affairs had in September approved disinvestment in the company. The government has a 85% stake in the company. During the current fiscal, the government has lined up stake sale in Oil India, MMTC, Hindustan Copper, SAIL and NMDC.
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