Presented byN.karthikeyan

II M.B.A'

Disinvestment policy

Contents

Introduction Definition Objective of disinvestment Reasons for disinvestment Problems of disinvestment Overview of India's disinvestment Conclusion

Introduction

Investment and disinvestment are two sides of the same coin. Investment refers to conversion of money or cash into securities, debentures, bonds or any other claims on money. At the same time, disinvestment invloves the conversion of money claims or securities into money or cash.

Definition

“The action of an organisation or government selling or liquidating an asset or subsidiary”is called disinvestment

Objectives of disinvestment

To reduce the financial burden on government To improve public finances To introduce, competition and market discipline To increase growth of the firm To encourage wider share of ownership

Reasons for disinvestment

To meet fiscal deficit Expantion or diversification of the firm To repayment of government debts Implementation of government plan PSU's give negative rate of return on capital

Problems of disinvesment

Dilution of ownershipDisinvestment affects labour

Overview of India's disinvestment

Disinvestment policies introduce after new economic policy in july – 1991

The disinvestment policy as an active tool to reduce the burden to financing the PSU

NIF (National investment fund) Government has a borrowing plan of 4,00,000cr

roughly 2,45,000 cr would raised through OMO

1991-92 31 PSU were disinvested and collected amount 3038 cr

1991-01 20506 cr were collected through disinvestment policy

1991-96 12,300 cr was generated 7300 cr was used to fiscal deficts

UPA government received 47,901cr from investment of equity in PSUs

2004-05 4424cr2005-06 1581cr2006-07 534cr2007-08 38,785cr2008-09 2,567cr

UPA government is plan to generated 1120cr from disinvestment in 2009-10

This year generated 1120cr from disinvestment like issue of IPOs there are

Oil IndiaRITESCochin shipyardmanganese oretelecommunication consultant indiarashtriya ispat

Coming IPOs are:

NHPC – IPO will open on Aug 7 and it will close on Aug 11NHPC plans to raise 6048cr from its 15% stake (168cr share issue) 5% is goes to govt disinvestment other 10% will use for company growth.

United Bank – IPO will come end of decemberUnited Bank is plan to raise 400cr from its 20%stake

Proposal plan - 45000cr

Conclusion

Thank you