Government mulls selling stakes in Hindustan Zinc, ITC to reach FY23 divestment target: Report

The government is considering selling its stakes in Hindustan Zinc and ITC among others to meet the disinvestment target for the current fiscal, said Economic Times stated in a report quoting sources.

The delay in the strategic sale of Pawan Hans, Shipping Corporation of India, IDBI Bank and Bharat Petroleum Corporation; as well as the scaled-down public offer of Life Insurance Corporation (LIC) of India has forced the government to consider other options to reach its divestment target, the report added.

The Centre has a 29.54 percent stake in Hindustan Zinc worth about ₹37,000 crore while it holds 7.91 percent of ITC through the Specified Undertaking of the Unit Trust of India (SUUTI), which is valued at about ₹27,000 crore, based on Friday's closing price on the BSE, the ET report further informed.

Details of an offer for sale (OFS) and the extent of divestment are still being worked out. The government expects the process to be completed by September, it noted.

The disinvestment target for FY23 stands at ₹65,000 crore. The Centre has raised around ₹23,575 crore through disinvestment so far in the current fiscal year. Of this, ₹20,560 crore was from the LIC IPO and ₹3,000 crore from the sale of 1.5 percent in state-run explorer ONGC.

However, now the Department of Investment and Public Asset Management (DIPAM) has begun internal discussions on stake sales in HZL and ITC, said people with knowledge of the matter told ET.

"We have reworked our strategy. Even in the current market situation, we expect stake sales in these to fetch us ₹4,000 crore. DIPAM is working on technical aspects of the OFS and the note will be sent for cabinet approval by June 15," the official added.

"We are aiming to conclude these before September. But given the global situation, there are factors beyond our control so it would not be wise to give a definite timeline. We are flexible with timing," he further informed ET.

The department has also held some preliminary discussions with the Vedanta Group last week after it withdrew litigation. Vedanta holds a majority stake in HZL, having acquired it in an earlier round of disinvestment in 2002.

The report further noted that the strategic sale of BPCL has also been called off due to a lukewarm response from investors in view of geopolitical developments while the divestment of SCI is also running behind schedule, though the government is hopeful of completing the transaction in the current financial year.