From Air India to BPCL to Container Corp ⁠— new ministers Scindia, Sonowal and others have nine months to execute key share sales

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Bhakti MakwanaJul 8, 2021, 17:41 IST
From Air India to BPCL to Container Corp ⁠— new ministers Scindia, Sonowal and others have nine months to execute key share sales

BCCL

One of the big reasons the cabinet reshuffle by Indian Prime Minister Narendra Modi is of interest to the country’s stock market is this ⁠— the impending share sales in government companies.


As new entrants like Jyotiraditya Scindia and Sarbananda Sonowal take charge of ministries, one of the tasks cut out for them is to execute the disinvestment plan that will bring in the necessary resources for the cash-strapped government. Between the economic slowdown caused by the pandemic, and the subsequent rise in welfare and stimulus costs, the sale of precious government assets is something that investors have been looking forward to.


Finance Minister Nirmala Sitharaman had set the DIPAM (Department of Investment and Public Asset Management) a target of ₹1.75 lakh crore ($23.43 billion at current rates) for the financial year ending March 2022.


These are the marquee companies where the government plans to sell its stake and here are the new ministers who have about nine months to make it happen.
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Air India

Air India
BCCL

Jyotiraditya Scindia becomes the new Civil Aviation Minister who will also look into the divestment of Air India which is said to be completed by the end of 2021. The divestment process for Air India has moved on to the second stage where financial bids will be received from the interested parties. The Tata Group and SpiceJet are the two bidders who expressed interest in December 2020.

As part of the process, the national carrier has started the auction of some of its properties today, the day Scindia has been sworn in.

Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited
BCCL

Hardeep Singh Puri, who was in charge of civil aviation in the previous cabinet, had the tough challenge of selling Air India. But now, with the Cabinet reshuffle, he will take charge as minister of petroleum and natural gas and will look into the divestment process for Bharat Petroleum Corporation Limited (BPCL).

The government of India plans to sell 53% stake in BPCL. That’s over ₹50,000 crore at current market value and would make for a chunky part of Finance Ministry’s disinvestment target of ₹1.75 lakh crore for the financial year ending March 2022.

Currently, the government is mulling on giving 100% foriegn direct investment in state owned oil refiners to make the road clear for BPCL divestment. At present, FDI is at 49%. Shares of BPCL have gained 22% in the last one year with current price at ₹464.

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Shipping Corporation of India

Shipping Corporation of India
BCCL

Sarbananda Sonowal has been given charge of the Ports, Shipping and Waterways portfolio, replacing Mansukh Mandaviyam, who was in charge of shipping in the previous cabinet. Three bidders have been reportedly finalised for the next round. Shares of Shipping Corporation have gained 84% in the last one year to now trade at ₹108.25.

CONCOR

CONCOR
Wikipedia

Ashwini Vaishnaw, new Union Minister of Railways and Information Technology, will look into the divestment process of Container Corporation of India. The government to divest 30.8% of its 54.8% and transfer the management control. Shares of the company have gained 59% in the last one year which now trades at ₹693.90

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