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Nalco disinvestment deferred on valuation concerns
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Tuesday, 13 Nov 2012

ET reported that the government has deferred stake sale in state run aluminium company Nalco after its poor Q2 performance raised valuation concerns, but it now plans to sell equity in Hindustan Aeronautics. Nalco disinvestment will happen next quarter.

Mr Mr Dinshaw Patel mines minister of India said that it is deferred for now. There is need to strengthen the financial performance of the company further.

Further discussion on Nalco disinvestment would happen again between January 7 and January 15. Last month, the government had to defer the public issue of Rashtriya Ispat Nigam as the steel ministry felt that the issue price suggested by merchant bankers was less than the book value.

The finance ministry has now moved another proposal to maintain a healthy pipeline of offers to meet its disinvestment target of INR 30,000 crore for the year. The Cabinet is expected to take up a proposal to sell 10% equity in HAL.

Mr Mohammad Haleem Khan disinvestment secretary said that Nalco's Q2 results were not representative of its value. Q2 performance does not represent the intrinsic value. The merchant bankers said that Q2 is an aberration and Q3 is bound to be very good.

Mr Khan said that so after Q3, it will be done. Enam Securities, SBI Caps and IDFC were acting as merchant bankers for the Nalco disinvestment. The 12.5% stake sale of Nalco was expected to fetch over INR 1,500 crore to the exchequer at the current market price.

The finance ministry's attempts to speed up disinvestment have not met with much success seven months into the year but the government is still hopeful of meeting the target.

Mr Khan said that "Hindustan Copper disinvestment will be next followed by NMDC and OIL. We hope to garner INR 12,000 crore through three issues by December end.

He said that "We have scheduled large number of cases and they are in the pipeline. Things are getting difficult but not impossible. We are confident of meeting the Rs 30,000-crore disinvestment target."

Source - The Economic Times


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