What is the issue?
- Union government is taking various disinvestment plans to get rid of fiscal burdens.
- Lack of transparency in operations of PSUs hinders the disinvestment plans.
What are the process involving in disinvestment?
- The disinvestment programme of the public sector units usually made through
- Market sales - This a direct sale method, where PSUs returns capital to the Union government through buyback offer.
- New listings - This method involves sales through stock markets, by which IPOs for various companies are announced.
- Strategic sales - This is through giving up shareholdings of the PSU companies which needs to be disinvested.
What are the concerns with this disinvestment programme?
- The disinvestment measures stated were made possible, with a certain effort from the government.
- But the disclosures by the PSUs for their IPOs lack sufficient company level data on segment wise revenues, products, clients and key data on costs and profits.
- This attitude of withholding information is not helping as the competing private entities and listed companies disclose their operations.
What changes are needed to improve ratings of the PSUs?
- Union government has to learn from the private sector firms, which prepare for the debut with corporate campaigns and multi media advertising before IPOs.
- Before disinvestments the head of the PSUs should make media appearances presenting the prospectus and vision of the organisation.
- The offering window has to be extended to ensure the prospective investors have time to study the PSUs and make the purchase.
- The timing for IPOs also has to be worked out such that the PSUs profits are rising and it is presented positively.
Source: Business Line
