Cabinet allows alternative mechanism to decide for sale of state-run company

To fast-track strategic sale of CPSEs, the Cabinet Thursday allowed the Alternative Mechanism to decide on the timing, price and quantum of shares of a state-run company to be put on the block for outright sale. "The CCEA (Cabinet Committee on Economic Affairs) has approved delegation of the following Alternative Mechanism in all the cases of strategic disinvestment of CPSEs where CCEA has given 'in-principle' approval for strategic disinvestment," an official statement said.

The Alternative Mechanism (AM) on strategic disinvestment was set up in 2017 and consists of the finance minister, the road transport and highways minister and the minister representing the respective administrative department. So far, the AM has decided on the terms and conditions of the sale from the stage of inviting expressions of interest (EoIs) till inviting of financial bid.

With Thursday's decision, the panel has been permitted to take decisions on final pricing of the transaction, the quantum of shares to be sold and the selection of strategic partner or buyer. "This will facilitate quick decision-making and obviate the need for multiple instances of approval by CCEA for the same CPSE," the statement said after the Cabinet meeting, headed by Prime Minister Narendra Modi.

As many as 35 central public sector enterprises (CPSEs) have already been lined up for a strategic sale. The companies that have been shortlisted for strategic sale include Pawan Hans, Air India, Air India subsidiary AIATSL, Dredging Corporation of India, BEML, Scooters India, Bharat Pumps Compressors, and Bhadrawati, Salem and Durgapur units of steel major SAIL. The other CPSEs for which approvals are in place for outright sale include Hindustan Fluorocarbon, Hindustan Newsprint, HLL Life Care, Central Electronics, Bridge & Roof India, Nagarnar Steel plant of NMDC and units of Cement Corporation of India and ITDC.

The CCEA Thursday decided to allow the AM to decide on the quantum of shares to be transacted, mode of sale and final pricing of the transaction or lay down the principles or guidelines for such pricing, and the selection of strategic partner or buyer, terms and conditions of sale. The AM will also decide on the proposals of the Core Group of Secretaries on Disinvestment with regard to the timing, price, the terms and conditions of sale and any other related issue to the transaction.

Department of Investment and Public Asset Management (DIPAM) Secretary Atanu Chakraborty had earlier said that his department is planning to streamline processes to cut down the "long winding" time for the outright sale of state-owned companies. The government has set a target of raising Rs 80,000 crore from CPSE disinvestment, including by way of minority stake sale and strategic sale, in the current financial year. The same for the next fiscal has been budgeted at Rs 90,000 crore.

(With inputs from agencies.)