Disinvestment As Reforms: A Fresh Rs 13,000 Crore Target
The central government recently announced plans to sell shares of four public sector undertakings as part of its budget target of Rs 30,000 crore.
The PSUs short-listed for share sale include trading company Metals and Minerals Trading Corporation, copper manufacturer Hindustan Copper, oil explorer Oil India and aluminium manufacturer National Aluminium Company.
IndiaSpend's Sourjya Bhowmick looks at the financial details of the PSUs on some important parameters.
Metals and Minerals Trading Corporation
MMTC, established in 1963, is one of the two highest foreign exchange earners for India. It is also the largest international trading company of India and the largest non-oil importer in India. Table 1 shows the balance sheet of MMTC over the last 10 years.
Table 1: MMTC
| Year | Turnover | Net Profit/Loss | Share Capital | Capital Employed | Manpower (In No) |
| 2011 | 65,929 | 121 | 100 | NA | NA |
| 2010 | 68,855 | 216 | 50 | NA | NA |
| 2009 | 36,821 | 140 | 50 | 856 | 188 |
| 2008 | 26,423 | 200 | 50 | 747 | 195 |
| 2007 | 23,302 | 127 | 50 | 589 | 200 |
| 2006 | 16,362 | 108 | 50 | 1,073 | 203 |
| 2005 | 15,124 | 107 | 50 | 783 | 206 |
| 2004 | 9,099 | 51 | 50 | 804 | 208 |
| 2003 | 6,226 | 25 | 50 | 511 | 216 |
| 2002 | 7,244 | 18 | 50 | 750 | 240 |
| 2001 | 5,302 | 12 | 50 | 825 | 245 |
| 2000 | 4,697 | 15 | 50 | 774 | 286 |
(Figures in Rs crore; Source: MMTC Limited )
Hindustan Copper
Hindustan Copper is under the Ministry of Mines, and was started on 9th November, 1967. Its operations cover mining, beneficiation, smelting, refining and casting of refined copper into downstream saleable products. Table 2 shows the balance sheet of HCL over the last 10 years.
Table 2: Hindustan Copper
| Year | Turnover | Net Profit/Loss | Share Capital | Capital Employed | Manpower (No) |
| 2010-11 | 1,258 | 224 | 463 | 639 | 5,100 |
| 2009-10 | 1,430 | 155 | 463 | 585 | 5,300 |
| 2008-09 | 1,349 | 10 (-) | 463 | 571 | 5,440 |
| 2007-08 | 1,840 | 246 | 463 | 657 | 5,405 |
| 2006-07 | 1,800 | 314 | 977 | 505 | 5,451 |
| 2005-06 | 1,054 | 106 | 949 | 247 | 5,583 |
| 2004-05 | 559 | 56 | 949 | 235 | 5,665 |
| 2003-04 | 519 | 56 (-) | 909 | 215 | 5,995 |
| 2002-03 | 506 | 148 (-) | 795 | 204 | 7,865 |
| 2001-02 | 605 | 184 (-) | 710 | 249 | 9,502 |
(Figures In Rs crore; source: Hindustan Copper Limited)
As can be observed from the table, there were four years when HCL reported a loss.
OIL India
Oil India became a wholly-owned Government of India enterprise in 1981. It is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of liquid petroleum gas. Presently, it is one of the top 10 profit-making PSU. Table 3 shows the balance sheet of OIL over the last 10 years.
Table 3: OIL India
| Year | Turnover | Net Profit/Loss | Share Capital | Capital Employed |
| 2010-11 | 8,303 | 2,888 | 240 | 15,728 |
| 2009-10 | 7,905 | 2,610 | 240 | 13,019 |
| 2008-09 | 7,241 | 2,162 | 214 | 8,919 |
| 2007-08 | 6,082 | 1,789 | 214 | 7,393 |
| 2006-07 | 5,389 | 1,640 | 214 | 7,141 |
| 2005-06 | 5,550 | 1,690 | 214 | 5,917 |
| 2004-05 | 3,888 | 1,062 | 214 | 5,195 |
| 2003-04 | 3,145 | 9,497 | 214 | 4,573 |
| 2002-03 | 2,897 | 9,167 | 214 | 4,073 |
| 2001-02 | 1,896 | 525 | 214 | 3,326 |
| 2000-01 | 2,024 | 467 | 214 | 3,002 |
(Figures In Rs Crore: Source: Oil India )
National Aluminium Company
Nalco was incorporated in 1981 as a public enterprise. It is Asia's largest integrated aluminium complex and its functions cover bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and port operations. Table 4 shows the balance sheet of Nalco over the last five years.
Table 4: National Aluminium Company
| Year | Turnover | Net Profit/Loss | Share Capital | Capital Employed |
| 2011-12 | 6,927 | 850 | 1,289 | 10,805 |
| 2010-11 | 6,370 | 1,069 | 1,289 | 8,798 |
| 2009-10 | 5,310 | 814 | 644 | 7,834 |
| 2008-09 | 5,531 | 1,272 | 644 | 6,628 |
| 2007-08 | 5,474 | 1,632 | 644 | 7,031 |
(Figures In Rs Crore; Source: NALCO)
The data prior to 2007-08 was not available. As can be seen, NALCO has never reported a loss for the last five years.
Can the target be achieved?
The main idea behind disinvestment for the government is to raise Rs 30,000 crore. Table 5 gives a sense about how much funds can be raised by the proposed stake sale and the share price of the companies as on September 14, 2012.
Table 5: Fund Raising Plan
| PSU | Govt To Divest ( as % of equity) | Total Equity (Rs Cr) | No. of Shares to be Divested ( In Cr) | Last Traded Price (Sept 14, 2012) (In Rs) | Funds That can be raised at last price (Rs Cr) |
| MMTC | 9.33 | 100 | 9.27 | 778 | 7,212 |
| Hindustan Copper | 9.59 | 463 | 8.84 | 269 | 2,377 |
| Oil India | 10 | 601 | 4.72 | 486 | 2,293 |
| Nalco | 12.15 | 1,288 | 27.29 | 54 | 1,473 |
| Total | 13,355 |
Thus, out of the total budgeted target of Rs 30,000 crore, around 45%, i.e. Rs 13,355 crore, can be raised through the present plan.
