PSU Privatization / Strategic Disinvestment

jaysimha · Post by **jaysimha** » 02 May 2018 13:14

Corrigendum Air India
http://www.civilaviation.gov.in/sites/d ... 0India.pdf

Clarifications sought by Interested Bidders on PIM/EoI for the Strategic Disinvestment of Air India
and its Subsidiaries/JV

http://www.civilaviation.gov.in/sites/d ... 0India.pdf

jaysimha · Post by **jaysimha** » 02 May 2018 17:36

https://www.sebi.gov.in/sebi_data/attac ... 131490.pdf

RED HERRING PROSPECTUS
Dated March 5, 2018
100% Book Built Offer
BHARAT DYNAMICS LIMITED

jaysimha · Post by **jaysimha** » 04 May 2018 16:57

I think we missed this
RED HERRING PROSPECTUS
Dated March 21, 2018
100% Book Built Issue
HINDUSTAN AERONAUTICS LIMITED
https://www.sebi.gov.in/sebi_data/attac ... 824568.pdf

jaysimha · Post by **jaysimha** » 08 May 2018 10:44

PRELIMINARY INFORMATION MEMORANDUM For Inviting Expression of Interest for STRATEGIC DISINVESTMENT OF HINDUSTAN FLUOROCARBONS LIMITED By HINDUSTAN ORGANIC CHEMICALS LIMITED
http://dipam.gov.in/sites/default/files ... download=1

-------------------------------------

Project: Disinvestment of 100.00% shareholding held by the Hindustan Paper Corporation Limited (HPCL) in Hindustan Newsprint Limited (HNL)

http://heavyindustry.gov.in/writereadda ... stment.pdf

ashbhee · Post by **ashbhee** » 31 May 2018 21:29

I am really disappointed with this. I was hoping they will complete Air India disinvestment before the end of NDA first term.

https://m.timesofindia.com/business/ind ... 401806.cms

Suraj · Post by **Suraj** » 31 May 2018 22:36

ashbhee wrote:I am really disappointed with this. I was hoping they will complete Air India disinvestment before the end of NDA first term.

https://m.timesofindia.com/business/ind ... 401806.cms

It’s just the markets demonstrating that AI cannot be divested of in one piece . There are plenty of takers for individual pieces of it .

Supratik · Post by **Supratik** » 31 May 2018 23:05

IMO AI is not saleable even in parts because of the enormous liabilities. Airlines is a thin margin business. Govt and lenders will have to take a hair cut. Best done after 2019 elections as otherwise charges of selling family jewels, etc will be brought in. Will be happy to be proven wrong.

Suraj · Post by **Suraj** » 31 May 2018 23:35

AI has a lot of valuable components. Substantial property ownership, technical centers and personnel base in BOM and DEL, significant grandfathered bilateral & fifth freedom rights (e.g. they are one of the few permitted to carry passengers on JFK/EWR-LHR), highly coveted slots at some major airports, and separately both an international network connected to Star Alliance, and a domestic network.

ashbhee · Post by **ashbhee** » 05 Jun 2018 23:14

Sell Air India or shelve it, fast

https://www.deccanherald.com/opinion/fi ... 73367.html

ashbhee · Post by **ashbhee** » 06 Jun 2018 20:38

Govt clears revised norms for time-bound closure of sick PSUs

The government on Wednesday approved revised guidelines for time-bound closure of sick and loss-making central public sector enterprises and the disposal of their movable and immovable assets.

https://www.deccanherald.com/national/g ... 73583.html

ashbhee · Post by **ashbhee** » 25 Jun 2019 07:53

Now BSNL wants a handout. For God Sake, sell BSNL Air India

> Ailing state-owned telco BSNL has sent an SOS to the governm ..
http://timesofindia.indiatimes.com/arti ... aign=cppst

chetak · Post by **chetak** » 25 Jun 2019 09:22

Suraj wrote:
ashbhee wrote:I am really disappointed with this. I was hoping they will complete Air India disinvestment before the end of NDA first term.

https://m.timesofindia.com/business/ind ... 401806.cms
It’s just the markets demonstrating that AI cannot be divested of in one piece . There are plenty of takers for individual pieces of it .

these individual pieces will then slyly be devalued, using a variety of fly by night valuers and hived off to favored investors who will front for the actual shareholders.

A lot of gulf airlines are waiting for just such a disinvestment opportunity and are willing to pay well for the chance.

It never ceases to amaze me that jet which had so many foreign investors but always managed to raise money mostly from Indian PSU banks with one particular bank always managing to take a lead in such exciting opportunities in almost every failed venture.

Its almost uncanny how many gora banks can fortell the future of Indian ventures.

there is already a huge tussle for grabbing AI's ground operations dept, one of the many depts that "investors" are keen on and which has a potentially lucrative operating presence in many Indian airports.

chetak · Post by **chetak** » 25 Jun 2019 14:59

ashbhee wrote:Now BSNL wants a handout. For God Sake, sell BSNL Air India

> Ailing state-owned telco BSNL has sent an SOS to the governm ..
http://timesofindia.indiatimes.com/arti ... aign=cppst

BSNL is not completely at fault

1. BJP Govt didn’t allot them 4G
2. All Pvt Telcos are pumping in finance but BSNL barred from taking loans
3. Zero capital investment by Govt
4. No investment in towers

ashbhee · Post by **ashbhee** » 27 Jun 2019 04:05

chetak wrote:
ashbhee wrote:Now BSNL wants a handout. For God Sake, sell BSNL Air India
BSNL is not completely at fault

1. BJP Govt didn’t allot them 4G
2. All Pvt Telcos are pumping in finance but BSNL barred from taking loans
3. Zero capital investment by Govt
4. No investment in towers

It is not Govt. job to allow or disallow, you need to privatize it, private entity will act at its best interest and interest of share holders.

chetak · Post by **chetak** » 27 Jun 2019 04:52

ashbhee wrote:
chetak wrote:
It is not Govt. job to allow or disallow, you need to privatize it, private entity will act at its best interest and interest of share holders.

yeah, then why did they do so for AI and continue to do so

Is telecommunications of any less strategic or even nationally vital less importance than commercial flying

the govt must get its priorities right. Communications is at the very existentialist core of all services.

where we have miserably failed in running such organizations is this deeply entrenched " jobs for the boys" racket that every casteist politician has perfected, packing the employee pool with deadwood, who are entitled, militant and lazy, unionized tinpots and who merely swell the ranks of the "workers" without much output or production and foisting a huge financial burden on the already tottering entity.

I don't hear any PSU employee say the they are willing to take a 30% paycut to help the company through its present difficulties.

jpremnath · Post by **jpremnath** » 28 Jun 2019 17:11

chetak wrote:
ashbhee wrote:Now BSNL wants a handout. For God Sake, sell BSNL Air India

> Ailing state-owned telco BSNL has sent an SOS to the governm ..
http://timesofindia.indiatimes.com/arti ... aign=cppst
BSNL is not completely at fault

1. BJP Govt didn’t allot them 4G
2. All Pvt Telcos are pumping in finance but BSNL barred from taking loans
3. Zero capital investment by Govt
4. No investment in towers

Having both my parents as BSNL employees, I will chip in with their side of the story on who and what is responsible for the company being in this mess..

1. The employees take a good share of the blame for giving a PSU level service and attitude to customers when battling cut throat competition. The employees are well paid and took it for granted their 'job till 60' life. Never thought a 'central govt' firm will face a situation of delayed salaries. The trade unions inside the company is strong and brings in plenty of dead weight.
While everyone blames BSNL for pathetic service, I would like to point out that the private companies are not that great either. There are plenty of stories where you get suspect billing which you cant prove otherwise. The customer service is smooth until they have to pay you back on anything. I had horrible experience with Airtel once.
2. As Chetak said, the govts from the UPA2 to NDA2 has been sitting on many of the company's request for purchasing equipment, 4G and upgrading legacy system. There is a feeling that the political parties for some reason wants the slow death of the company. Even today the minister just gives lip service to improving the health of the company but does nothing. The public keeps blaming the employees for all the mess while most of the problem faced by the customers is because of old equipment which breaks down and the company doesnt have the money to replace them.
3. The upper and middle management who takes bribe from rival telcos to undermine the service in some profitable regions. My wife had this experience while at college which was in a remote location. BSNL has solid coverage and every student and staff had their sim. Then one day Idea started in the locality and within a few months, the BSNL towers gave erratic signals and call quality dropped. Frustrated without any change in the situation for months, students and staff moved en masse to Idea and Airtel. This might sound like a one off incident, but you will be surprised how often this happens.

gaurav.p · Post by **gaurav.p** » 28 Jun 2019 19:35

Fix the human resource management of all PSUs, corporatise them. But don't short sell and ignore them and eventually liquidate them at dirt prices.

IIRC BSNL still has the largest network with optical fibre network in India. Having the 5G spectrum will ease the revenue issues. Communications is really a strategic sector not to forgo. After recent cyclone Fani, BSNL was the first network to get back at the earliest, there was no jio, airtel nothing.

Plus if you go to tier3 cities in India. The only network that you get with good enough internet it BSNL. The private moguls are just here for profitability, they spend a lot of money to sell the same function which is already being done by PSUs.

Scope for reform is there anywhere, but stop this hitjob of PSUs sucking to the core. Just because they don't invest to sell a pipedream doesn't mean they are the villains.

ashbhee · Post by **ashbhee** » 14 Oct 2019 08:40

It looks like RSS is coming around to accepting disinvestment.
https://timesofindia.indiatimes.com/ind ... 496568.cms

ashbhee · Post by **ashbhee** » 18 Oct 2019 05:04

Air India disinvestment: Fresh EoI in November

“There are several things which are being worked out at the top level. One of them is offering 100 per cent stake for the buyers so that they don’t worry about any interference,”

Read more at: https://www.deccanherald.com/business/b ... 69059.html

Nikhil T · Post by **Nikhil T** » 18 Oct 2019 05:51

jpremnath wrote:
chetak wrote:
BSNL is not completely at fault

1. BJP Govt didn’t allot them 4G
2. All Pvt Telcos are pumping in finance but BSNL barred from taking loans
3. Zero capital investment by Govt
4. No investment in towers
Having both my parents as BSNL employees, I will chip in with their side of the story on who and what is responsible for the company being in this mess..

1. The employees take a good share of the blame for giving a PSU level service and attitude to customers when battling cut throat competition. The employees are well paid and took it for granted their 'job till 60' life. Never thought a 'central govt' firm will face a situation of delayed salaries. The trade unions inside the company is strong and brings in plenty of dead weight.
While everyone blames BSNL for pathetic service, I would like to point out that the private companies are not that great either. There are plenty of stories where you get suspect billing which you cant prove otherwise. The customer service is smooth until they have to pay you back on anything. I had horrible experience with Airtel once.
2. As Chetak said, the govts from the UPA2 to NDA2 has been sitting on many of the company's request for purchasing equipment, 4G and upgrading legacy system. There is a feeling that the political parties for some reason wants the slow death of the company. Even today the minister just gives lip service to improving the health of the company but does nothing. The public keeps blaming the employees for all the mess while most of the problem faced by the customers is because of old equipment which breaks down and the company doesnt have the money to replace them.
3. The upper and middle management who takes bribe from rival telcos to undermine the service in some profitable regions. My wife had this experience while at college which was in a remote location. BSNL has solid coverage and every student and staff had their sim. Then one day Idea started in the locality and within a few months, the BSNL towers gave erratic signals and call quality dropped. Frustrated without any change in the situation for months, students and staff moved en masse to Idea and Airtel. This might sound like a one off incident, but you will be surprised how often this happens.

I agree. I remember 10 yrs ago there was talk of $100 billion valuation for BSNL. Then came A Raja and we know how the company was systematically butchered.
https://www.outlookindia.com/newswire/s ... llion/3062

Overall, there are some stellar PSUs that are doing good work. Mostly Maharatnas and Navratnas such as IndianOil and GAIL. I feel we should close/sell off the suckers like Air India and BSNL. The airline industry is fundamentally unprofitable and frankly its debatable if India needs a national airline. BSNL is now unfortunately a lost cause because of technology denials and consequent customer erosion.

We should concentrate on a small set of PSUs and grant them autonomy. Currently, even a Maharatna like ONGC can be bullied to buy HPCL and still not get a seat on the HPCL Board. Similarly, there are some that are purely doing screwdriver giri but have the potential for far more e.g. BEML. Autonomy will drive better governance, better profits and valuations for GoI in the long term.

While not an apple to apple comparison, China's PSUs had $480 billion in profit last year.
http://www.chinadaily.com.cn/a/201901/1 ... e4cce.html

chetak · Post by **chetak** » 18 Oct 2019 10:52

Nikhil T wrote:
jpremnath wrote:
Having both my parents as BSNL employees, I will chip in with their side of the story on who and what is responsible for the company being in this mess..

1. The employees take a good share of the blame for giving a PSU level service and attitude to customers when battling cut throat competition. The employees are well paid and took it for granted their 'job till 60' life. Never thought a 'central govt' firm will face a situation of delayed salaries. The trade unions inside the company is strong and brings in plenty of dead weight.
While everyone blames BSNL for pathetic service, I would like to point out that the private companies are not that great either. There are plenty of stories where you get suspect billing which you cant prove otherwise. The customer service is smooth until they have to pay you back on anything. I had horrible experience with Airtel once.
2. As Chetak said, the govts from the UPA2 to NDA2 has been sitting on many of the company's request for purchasing equipment, 4G and upgrading legacy system. There is a feeling that the political parties for some reason wants the slow death of the company. Even today the minister just gives lip service to improving the health of the company but does nothing. The public keeps blaming the employees for all the mess while most of the problem faced by the customers is because of old equipment which breaks down and the company doesnt have the money to replace them.
3. The upper and middle management who takes bribe from rival telcos to undermine the service in some profitable regions. My wife had this experience while at college which was in a remote location. BSNL has solid coverage and every student and staff had their sim. Then one day Idea started in the locality and within a few months, the BSNL towers gave erratic signals and call quality dropped. Frustrated without any change in the situation for months, students and staff moved en masse to Idea and Airtel. This might sound like a one off incident, but you will be surprised how often this happens.
I agree. I remember 10 yrs ago there was talk of $100 billion valuation for BSNL. Then came A Raja and we know how the company was systematically butchered.
https://www.outlookindia.com/newswire/s ... llion/3062

Overall, there are some stellar PSUs that are doing good work. Mostly Maharatnas and Navratnas such as IndianOil and GAIL. I feel we should close/sell off the suckers like Air India and BSNL. The airline industry is fundamentally unprofitable and frankly its debatable if India needs a national airline. BSNL is now unfortunately a lost cause because of technology denials and consequent customer erosion.

We should concentrate on a small set of PSUs and grant them autonomy. Currently, even a Maharatna like ONGC can be bullied to buy HPCL and still not get a seat on the HPCL Board. Similarly, there are some that are purely doing screwdriver giri but have the potential for far more e.g. BEML. Autonomy will drive better governance, better profits and valuations for GoI in the long term.

While not an apple to apple comparison, China's PSUs had $480 billion in profit last year.
http://www.chinadaily.com.cn/a/201901/1 ... e4cce.html

My BSNL bb connection has now been down for the past four days with no idea of its restoration.

Rest assured that the next bill will arrive promptly, as always, with the usual threatening message about disconnection if not paid on time.

Frankly one becomes weary of supporting such scoundrels.

Despite the JE giving a direct order, a lowly lineman refused to change my line to another junction box when the cable pair was rendered useless due to water damage. I had to abandon that connection and get another with change of number and all the attendant hassles.

this company is being run by 4th class pass/fail yahoos who disregard instructions and as a result, linemen have started to dictate company policy.

like Modi said recently in another context, doob maro.

chetak · Post by **chetak** » 19 Oct 2019 22:08

twitter

Once Upon a time in 2008: BSNL planned an IPO to raise Rs. 40000 crores by selling just a 10% stake. Govt decided against it. Why? BSNL Union opposed it. One should have no sympathy for this company or its employees now

ashbhee · Post by **ashbhee** » 24 Oct 2019 02:42

BSNL, MTNL to be merged; Centre lines up Rs 70,000 crore revival package.

Digging ourselves into even bigger hole by throwing 70,000 crore at the problem.

Read more at:
http://timesofindia.indiatimes.com/arti ... aign=cppst

Nikhil T · Post by **Nikhil T** » 31 Oct 2019 03:51

100% agree. In the longer term, there's no need for BSNL and MTNL to operate while there are efficient private sector companies. If anything, Govt should provide a performance based subsidy for telcos to operate in remote areas. That will be far better than having BSNL attempt to operate as a corporate - it is just not one unfortunately.

Pretty sad because I remember back in college, BSNL had the best pricing and their SIM cards were hard to come by. Students would sell it to each other at 5X the price and BSNL would run "camps" once in a year to sell fresh SIMs. I wish we could prosecute the Telecom Ministers and the BSNL leadership that led us to this juncture - but that's just wishful thinking.

Varoon Shekhar · Post by **Varoon Shekhar** » 09 Nov 2019 21:59

question: when Public Sector Enterprises are dissolved/liquidated, are their facilities taken over and used, in all cases? When BHVP became defunct, it was taken over by BHEL, and its equipment was absorbed into BHEL. When Hindustan Cables stopped operations, it was taken over by OFB.

Did the same thing happen to Burn Standard, Tungabhadra Steel, NIDC, P&E, Hindustan Photo Films et al? Were their facilities and know-how made use of by another entity? Or was it just a passive liquidation? At least, was the land they were set up on, put to productive use?

ashbhee · Post by **ashbhee** » 05 Oct 2020 11:45

I think Govt should not just stop at corporatization of OFB. Armed forces should be give a free hand to buy the best products at the cheapest place available. OFBs should either sink or swim without Govt support.

Rishirishi · Post by **Rishirishi** » 06 Oct 2020 06:10

ashbhee wrote:BSNL, MTNL to be merged; Centre lines up Rs 70,000 crore revival package.

Digging ourselves into even bigger hole by throwing 70,000 crore at the problem.

Read more at:
http://timesofindia.indiatimes.com/arti ... aign=cppst

Yearly they are losing almost 17 000 cr. This is sufficient to build 250Km of world class 6 lane express way at Indian costs (including land purchase)

ashbhee · Post by **ashbhee** » 15 Oct 2020 02:32

It looks like GOI is committed to AI disinvestment. Maybe the 11th time (or whatever number this attempt is) will be the Charm.

Govt to go ahead with AI sale, may not retire debt - Times of India</title><meta name="description" content="India Business News: The government is moving ahead with Air India strategic sale and is expected to ask suitors to bid based on the combined equity and debt value, while turning down suggestions to either run the operations for next two-three years or shut down the national carrier.

https://timesofindia.indiatimes.com/bus ... 670635.cms

uskumar · Post by **uskumar** » 17 Nov 2020 16:09

Several EoIs received for BPCL sale, says Centre

Strange that oil biggies have given this a miss. India is probably last under-tapped growing market.

ashbhee · Post by **ashbhee** » 14 Dec 2020 07:52

Tatas bid for Air India, 67 years after exit

Tata Group, India’s largest conglomerate, is believed to have submitted an expression of interest for the beleaguered national carrier Air India over the weekend. It is learned that the vehicle used to file the interest in AI is AirAsia India, Where Tata Sons has a significant majority stake.

https://timesofindia.indiatimes.com/bus ... 712441.cms

ashbhee · Post by **ashbhee** » 11 Feb 2021 04:41

I wish Modi govt had done this in their first year in office in their first term.

Prime Minister Narendra Modi on Wednesday made a strong pitch for a bigger role for the private sector in the economy, saying that slandering private enterprise was tantamount to distrusting the potential of youth and suspecting their intent.

http://timesofindia.indiatimes.com/arti ... aign=cppst

venkat_kv · Post by **venkat_kv** » 18 Feb 2021 02:02

ashbhee wrote:I wish Modi govt had done this in their first year in office in their first term.

Prime Minister Narendra Modi on Wednesday made a strong pitch for a bigger role for the private sector in the economy, saying that slandering private enterprise was tantamount to distrusting the potential of youth and suspecting their intent.

http://timesofindia.indiatimes.com/arti ... aign=cppst

Saar, he could have done that but you would hear non stop rona dhona by all the assorted motley crew about favoring the private sector. Right now he has done the Jan Dhan, toilets, aadhar based direct transfer so the common man knows that govt is looking for their well-being.
It would be difficult to do this in the first year without the people trusting the govt as much as they do now.

Also the govt was structurally setting up the economy to be on a firmer footing with reforms coming in and trying to solve a myraid of issues - trying to bringing more individuals under tax net, NPA from banks and demonetization (although this came much later).

VinodTK · Post by **VinodTK** » 22 Feb 2021 03:21

Do not know if this belongs here; however still god news

Amazon India inks MoU with the Directorate General Resettlement for hiring ex-service personnel

Amazon India has signed a Memorandum of Understanding (MoU) with the Directorate General Resettlement (DGR), to provide ex-service personnel with work opportunities across its growing operations network in India. With this partnership, Amazon India will continue to create alternate career opportunities for ex-service personnel who have served the country.

The MoU was signed between Liju Thomas, HR Director, Customer Fulfillment & Corporate, Amazon India Operations and Maj Gen MK Sagoch, Director General, DGR.

The association with DGR will further enable Amazon India to mobilise the untapped potential of veterans, giving it access to a greater talent pipeline. Veterans will have access to various work opportunities including a mix of individual contribution and managerial roles across its Fulfilment Centres, Sort Centres, and Delivery Stations. This collaborative effort further expands Amazon India’s existing Military Veterans Employment program.
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From:The Economic Times

Kakkaji · Post by **Kakkaji** » 20 Aug 2025 22:12

Paging Suraj San and other ECON Gurus on BRF:

I wish to share my thoughts and seek your opinion on an issue that has been bothering me very much lately, i.e., the glacial pace of disinvestment in public sector companies by the GoI.

I have been following news about disinvestment by the GoI for a long time, since the days of NDA1 government under ABV, when several high-profile disinvestments were made by Arun Shourie as the disinvestment minister. Subsequently, the UPA1 and UPA2 governments put the disinvestment issue on the back burner. So, I had high hopes for disinvestment picking up pace under NDA2 under Modiji. However, those hopes were belied during Modi1.0 and Modi2.0, when only significant disinvestment was Air India. All other disinvestments seem to be stuck somewhere in the process. And there has been no visible progress under Modi3.0 either.

As someone who believes that disinvestments by the GoIs are important not just for raising revenues for the Government (that can be better utilized for infrastructure projects), but also for improving the efficiency of the public sector units, I have been thinking about how this process can be speeded up, keeping in mind the political and other constraints the GoI will face in doing so.

I thought of a solution where the GoI could follow something akin to a “dollar cost averaging” process to get past the politicalse constraints and speed up the disinvestment. I put my thoughts in a letter to the Prime Minister that I sent him as a LinkedIn post earlier this year. I never received a reply.

I am posting below the message I sent the Prime Minister. I would appreciate it if the ECON gurus on the BRF could review it and post their comments below. It is alright if you tell me that my idea is totally wrong, but please also tell me why.

TIA

“Respected Pradhan Mantri ji:

I have a suggestion about how the Government can accelerate the disinvestment in Public Sector Units through pre-announced and consistent daily sales. This method can also be called “Rupee Cost Averaging”.

Before I describe my method, please let me first give my opinion on why, for the past several years, has the Government of India been missing its annual disinvestment targets by a wide margin.

In my opinion, the following are the reasons why the various methods employed by the Government to disinvest its equity in the various PSUs are failing to meet their targets:

1. Strategic Sale through competitive bidding: This is the method that should generate the maximum sale proceeds for the Government, and at the same time maximize the future profit-making ability of the PSUs in private hands. However, over the past several years, due to political and procedural reasons, the process of strategic sales has become like a slow game of snakes and ladders that is played over multiple years. Most of the planned sales are stuck somewhere in the sale process or have been abandoned altogether. Some sales had to be canceled at the last stage because no qualified bids were received, or when the winners backed out after winning the auction. Even the few sales that have been concluded have faced political criticism after sale. I think that, for the foreseeable future, this method of strategic sales will not result in many actual sales.

2. Offer for Sale (OFS): While this method has generally worked, and generated revenue for the Government, it has not met the targets the Government set in the annual budget. The problem here has been that of the process and timing. I have observed that when the markets are high, the Government is not ready to sell because it is going through the steps to prepare the offer for sale. By the time the preparatory steps have been completed, and the Government is ready to make the offer; the market goes down, and the Government defers the sale. I assume that the Government is so afraid of being accused of deliberately selling the shares cheap that it prefers to err on the side of caution by deferring every intended sale.

3. Market Sales (Dribble): I understand that the Government has, from time to time, been selling equity in some companies gradually in the secondary market through market operations called ‘dribble’. While this method does succeed in selling Government equity, the problem with it is that it is totally opaque. As the public gets to know about these sales only after they are completed, this method leaves the Government open to charges of bad market timing and selling the public assets cheap in collusion with market operators. For these reasons, this method cannot be used when the amounts involved are relatively large.

To avoid the above problems of process delays, market timing, and transparency; and to speed up the disinvestment of the PSUs, I suggest that the Government of India should follow what can be called a ‘pre-announced and consistent daily sales’ process. It will consist of the following steps:
The Department of Disinvestment should draw up a list of companies and the number of shares of these companies to be divested during a financial year. Then, the shares of each of the companies on this list should be divided into 200 equal lots. Then, instead of selling all these shares over a week in a limited-time Offer-for-Sale; sell them gradually over the period of one year, by offering one lot (out of 200) for sale every day through a daily book-building process. The Government should not announce a reserve price for such sales but let the market set the price every day. The units that are not sold during a day should be added to the lot offered for sale the next day.

After getting SEBI approval for such a sale, the Government should publicly announce the parameters of the sale: the number of shares to be offered each day, and the start and end dates of the sale.

Such a gradual sale will be totally transparent, as the schedule and amounts of sale will be made public well in advance.

This sale process will avoid the risk of market timing. The effects of market fluctuation on the sales price will be smoothed over the period of a year, and no one will be able to accuse the Government of selling its shares cheaply in a down market.

This process will also prevent the market manipulators from artificially lowering the bid prices, as they often try to do. Such operators may manipulate the bid prices for a few days but will not be able to continue to do so for over a year. After a few days, the markets will settle down to the true market price, resulting in true price discovery based upon the real value of the PSU companies in the sale lot.

Since the sales will be gradual (daily over a year), the market will be able to absorb the shares being offered without negatively impacting the broader market. Based upon experience from OFS sales in the past, there would be good demand, from institutional and retail investors, for quality PSU shares. With the ownership of these shares transferring from the government to investors, the Indian stock market will gain more breadth and depth, and the investors will get to own some professionally run good companies. With the proceeds of such gradual sales, the government will also get a steady daily stream of money that can be used for infrastructure projects or for other priority programs.

With such gradual sales, the Government should be able to speed up the disinvestment process and get its shareholding down to 51% in most PSUs during its current term with minimum political fuss.

Sir, I hope you find merit in my above suggestion of “pre-announced and consistent daily sales” for PSU disinvestment. I think that reducing the government’s capital that is locked up in the PSUs and spending it in building the public infrastructure will be very beneficial for the Indian economy.

Thank you for your time, and I look forward to your reply.”

Suraj · Post by **Suraj** » 21 Aug 2025 08:41

Dribble sales are not without downsides.

A continuous guaranteed supply of new shares puts downward pressure on existing holders and depresses equity price growth that would otherwise apply to just a fixed float that enables better price discovery. As such, it doesn’t generally help with investor confidence.

Another thing is that sales of this kind involve a lot of involvement from investment banks and other entities, and the cost of performing ~250 transactions (one per working day) of a small value vs one large stake sale will eat into the margins here.

Honestly there’s no magic bullet here. The unintended side effect of continuous depression of equity prices due to a daily supply of additional diluting shares could be turned into some kind of allegation of market manipulation or just plain failure to get a better price.

The nice thing about selling during a boom is that you can get everyone to agree the stock market is doing great and any sale made near the top is going to be viewed as a good deal, but the government often cannot act in time.

Kakkaji · Post by **Kakkaji** » 21 Aug 2025 08:55

Thanks for your comments Suraj San!

I agree that continuous sales will likely depress prices for existing shareholders but, after the sales are compleetd over a year, the prices will recover.

As long as no new shares are issued, shouldn't the market price of existing shares eventually reflect the true underlying value of the company?

Suraj · Post by **Suraj** » 21 Aug 2025 09:25

But the goal of the government is the ability to assign a budgetary target and to collect it. If the price goes back up after they're done selling for a below optimal price over a year, they get Rs.0 of that gain. In the process they accomplish nothing that would save them from potential political issues which you've already recognized as one of the factors affecting them today.

Kakkaji · Post by **Kakkaji** » 22 Aug 2025 01:25

Got it. Thanks

So, how can the government ensure that it is selling at the highest possible price, given that nobody can predict when the price will be highest?

Vayutuvan · Post by **Vayutuvan** » 22 Aug 2025 02:34

In the US, one can buy t-bills and treasury bonds from your investment broker company. For example, say you have an account on Fidelity. You also get a schedule of when the bonds are getting sold at what maturity. But you would not know the coupon rate (AP yield). Fidelity bids for a large chunk at certain coupon rate (depending on the fed rate). Then individuals with a Fidelity account can request for however many bonds at that rate in units $1000/unit. You might get or you might not get depending on whether Fidelity was able to obtain the bonds. If fidelity gets only a part of what they asked for, then they will prioritize among their individuals depending on how much money they have in Fidelity funds, I suppose. It is all quite transparent and can be done online at Fidelity's website.

Can something equivalent be implemented for sale PSU shares?

Suraj · Post by **Suraj** » 22 Aug 2025 12:00

Kakkaji wrote: ↑22 Aug 2025 01:25 Got it. Thanks

So, how can the government ensure that it is selling at the highest possible price, given that nobody can predict when the price will be highest?

It’s not that simple. Something that’s notable in this entire interaction is a bias towards solutioniizing without what appears to be sufficient understanding of the problem or the weaknesses of potential solutions.

Solutions in this space are built on a rigorous evaluation of the problem and understanding the strengths and weaknesses of potential options in pretty granular detail. My view here is that a solution will be a byproduct of a rigorous understanding of the problem and the ability to deconstruct multiple creative solutions.

As much as I admire the initiative of reaching out to leadership, it’s important to consider the above suggestion in the recipients position. You’ve just come up with a cool idea and shot off a message. The bureaucrat on the other end has to now figure out all the ways your idea cannot work. Then evaluate if the cost benefit works in favor,

Why should they, when there are probably hundreds of such messages ? Now consider a message that starts with a sharp demonstration that you understand ALL the challenges around disinvestment and stake sales, can quote historical information verbatim, have spoken to people in FinMin and based on all that, come up with a proposal that works out a smart approach that threads the multiple needles of the problem,

You e got to stop thinking you have potential solutions, and instead get to a level where you know the broad extent and depth of the problem down cold. If you do that, you’ll find people keenly appreciating how well you understand their problems and would be potentially impressed with what you’re offering as advice.

I realize that my work getting the PMOs interest might serve as a template, but I wasn’t aiming that way. Aashish and I focused on understanding the vaccine development and deployment problem in detail, spent several months reading, tracking data, talking to people and begging for feedback or insight into challenges. All the publicity around the book was entirely unanticipated - we didn’t ask them, they reached out - we just thought we did something that would hopefully be helpful.