The document discusses disinvestment by the government in public sector undertakings (PSUs), defining disinvestment as the sale or liquidation of assets for strategic purposes or to raise funds. It outlines various methods of disinvestment, its importance in generating revenue, and recent disinvestment activities, while also highlighting the merits and demerits of such practices. The challenges faced in pricing strategies and the implications of disinvestment on public interest and governance are also noted.

1. DISINVESTMENT BY
GOVERNMENT IN PSUs
Presentation By:-
• Swaraj Mishra

2. REDEFINING DISINVESTMENT
• Investment refers to the conversion of money or cash
into securities, debentures, bonds or any other claims
on money. As follows, disinvestment involves the
conversion of money claims or securities into money or
cash.
• Disinvestment can be simply defined as the action of
the organization’s (Or Government’s) Selling or
Liquidating an Asset or Subsidiary.
• It is commonly referred to as Divestment or Divestiture
• Government organization will typically disinvest an
Asset either as a strategic move for the company or for
raising resources to meet general / specific needs.

3. METHODS FOR DISINVESTMENT
• STRATEGIC SALE: Government sells a major portion of its stake to the
strategic buyer and also gives over management control.
• CAPITAL MARKET: Offering shares at a fixed price through a general
prospectus, the offer is made to the general public through the medium of
recognized market intermediaries.
• AUCTION:
• SALES TO EMPLOYEES:

4. IMPORTANCE OF DISINVESTMENT
1. It will generate money to reduce fiscal deficit.
2. Govt. Can utilizes these funds for welfare of public.
3. It will improve efficiency and abilities of organisation.
4. Lose making PSU's will make profit.
5. Private sector have huge money to invest so it will improve
infrastructure, technical efficiency.
6. It will change the attitude of lazy employees and will improve their
efficiency.

5. RECENT DISINVESTMENTS
1. ONGC
2. BHEL
3. PGCIL Ltd.
4. NHPC Ltd.
5. STC Ltd.
6. ITDC
7. NLC Ltd.
8. NFL Ltd.
9. MMTC Ltd.
10. NALCO Ltd.
* Disinvestment should be avoided in the sectors which are directly connected
to common people like oil, sugar etc.

6. CURRENT DISINVESTMENT FIGURES
1. The process for disinvestment in ONGC and NHPC has already
been started.
2. Also, the Government is looking to sell 5% stake in SAIL and 10%
each in RINL and HAL in the current Fiscal Year.
3. Disinvestment of 10% through an IPO in RINL is tentatively
scheduled for completion in the current financial year.
4. Of the disinvestment targets of Rs. 40,000 Crore in 2013-14, the
Government had mobilized Rs. 15,820 Crore.
5. In 2012-13 of 30,000 Crore target, 23,957 Crore was raised.

7. MERITS OF DISINVESTMENT
1. In private sector the decision making process is quick.
2. Decisions are linked with the competitive market changes.
3. Better corporate governance.
4. Transparency
5. The market participation in capital of PSUs through stock
exchanges would enable the market to discover the latent worth
of PSUs

8. DEMERITS OF DISINVESTMENT
1. Loss of public interest
2. There would be chances of Assets striping by the strategic partner.
3. The Government’s policy on Disinvestment includes the disposal
of both Profit making, as well as Potentially viable PSUs.
4. Private monopolies : VSNL to TATA
5. Loss of regular source of income to the government

9. POLITICS AND DISINVESTMENT
1. The main challenge in Disinvestment is the pricing strategy, as the
IPO market plays a critical role to decide the funds generated
through Disinvestment
2. Since last few years the IPO market has not picked up well, the
change in government is expected to trigger the market
sentiments on Disinvestments.

10. http://www.divest.nic.in/
http://www.bsepsu.com/
http://www.worldbank.org/
http://www.investopedia.com/
http://www.business.mapsofindia.com/
http://www.economictimes.indiatimes.com/