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Govt planning strategic sale of Dredging Corp through auction

LiveMint logoLiveMint 18-06-2017 PTI

New Delhi: The government is planning an outright sale of Dredging Corporation of India (DCIL) through auction, which could fetch about Rs1,400 crore to the exchequer.

Besides, there is a proposal to sell 100% government holding in four unlisted companies—Kamarajar Port, HLL Lifecare, Indian Medicines & Pharmaceutical Corporation Ltd, and Karnataka Antibiotics and Pharmaceuticals Ltd.

According to officials, the core group of secretaries on disinvestment, headed by the cabinet secretary, has already approved the sale of these five companies. The government think tank Niti Aayog too has favoured disinvestment.

An approval of the cabinet committee economic affairs (CCEA) would be sought soon, officials said.

The government currently holds 73.47% stake in Dredging Corporation of India. At the current market prices, sale of this stake would fetch about Rs1,400 crore to the exchequer.

The government is also mulling a two-stage auction process for the PSU, which made a net profit of Rs7.40 crore in 2016-17 fiscal. The two stage will entail shortlisting of eligible bidders and competitive financial bidding.

Also the CCEA is likely to consider an improved voluntary retirement scheme (VRS) along with the process of sale of the profit making PSU. Since dredging is not a strategic sector, the government is considering to exit the miniratna PSU by selling it to private players.

With regard to Kamarajar Port, the government is looking to divest 100% of its holding and is considering valuation methodology like discounted cash flow, asset valuation and relative valuation.

For HLL Lifecare, the proposal entails hiving off the CPSEs vaccine venture and Medipark into two separate special purpose vehicles. After that, the government could look at 100% stake sale in the company. The assets of Indian Medicines & Pharmaceutical Corp and Karnataka Antibiotics and Pharma, according to officials, are likely to be valued at a mix of discounted cash flow, relative valuation and asset-based valuation.

The government has budgeted to raise Rs15,000 crore through strategic sale of PSUs this fiscal.

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