You are using an older browser version. Please use a supported version for the best MSN experience.

Govt plans to offload more SUUTI stocks separately this year

LiveMint logoLiveMint 20-08-2017 Asit Ranjan Mishra

New Delhi: The finance ministry is planning to sell more of its Specified Undertaking of the Unit Trust of India (SUUTI) holdings separately this year even after including the three stocks under SUUTI in the upcoming second exchange traded fund (ETF) named Bharat 22.

An ETF is a basket of stocks with assigned weights that reflects the composition of an index.

Finance minister Arun Jaitley announced the Bharat 22 ETF on 4 August. It includes 22 central public sector enterprise (CPSE) stocks from six sectors including three SUUTI stocks with 40% weightage within the index.

While Larsen & Turbo Ltd (L&T) has 17.1% weightage in the ETF, ITC Ltd and Axis Bank Ltd have 15.2% and 7.7% weightage, respectively.

“SUUTI stake sale will happen within and outside Bharat 22. It can even happen simultaneously. We don’t see any problem there,” a finance ministry official said speaking under condition of anonymity.

The Parliament bifurcated UTI in 2002, creating SUUTI and UTI Asset Management Co. Pvt. Ltd, the former holding the assured-return investment plans of UTI and the latter overseeing market-linked plans.

The bifurcation took place after UTI’s US-64 investment plan ran into trouble.

SUUTI has minority stakes in 51 listed and unlisted companies, with most of its value locked in Axis Bank Ltd (11.53% stake), ITC (9.17%), and L&T (4.2%).

The government in June raised Rs4,000 crore through the sale of 2.5% stake in engineering firm L&T. Earlier in November last year, it sold 1.63% in L&T, while in March 2014, it sold 9% stake in Axis Bank to raise Rs5,500 crore through block deals.

The government has set an ambitious target of raising Rs72,500 crore from disinvestment in 2017-18, including Rs15,000 crore from strategic asset sales and Rs 11,000 crore from listing of five public sector insurance companies. So far this year, the government has raised around Rs10,000 crore through stake sales.

Jaitley has termed the target as a “stiff” one. 2017-18 is a fiscally challenging year, with the Reserve Bank of India (RBI) halving to Rs30,659 crore the dividend it will pay the government, revenue from the telecom industry expected to fall short, and higher expenditure on allowance payouts to central government employees.

WEB

To accelerate strategic disinvestments in central public sector enterprises (CPSEs), the cabinet committee on economic affairs (CCEA) last week mandated a panel headed by Jaitley to oversee the asset sale process. The panel—a so-called alternative mechanism—may also help the government raise more revenue from asset sales.

The government has so far shortlisted BEML Ltd, Scooters India Ltd and Pawan Hans Ltd and three units of the Steel Authority of India Ltd for strategic disinvestment this year. It is also moving towards privatising the national carrier Air India while retaining its national carrier status. Another ministerial panel headed by Jaitley is currently looking at ways to deal with the massive Rs 55,000 crore debt accumulated by the airline before putting it out for sale.

More From LiveMint

image beaconimage beaconimage beacon