McKinsey Quarterly
Outlook
- Referring to the CMP, the paper highlights the promise that "generally, profit-making PSUs are not to be privatised. The existing navaratna companies would be retained in the public sector while these companies raise resources from the capital market."
- A National Investment Fund will be set up—with effect from April 1, 2005—with "the realisations from disinvestment of CPSES", to "finance selected social sector schemes, which promote healthcare, education and employment" and for "capital investment in selected profitable and revivable CPSES".
- To call off disinvestment through strategic sale of profitable PSUs—but with the caveat that sale of minority shareholdings of government in profitable PSUs would continue.
- Listing all large profitable PSUs on the stock exchange—currently, only 28 of 100 profitable PSUs are listed—to "provide additional revenues to the concerned CPSES for raising capital" and expose the companies "to market discipline".
- Promises to dilute government equity in profitable PSUs to a level of 51 per cent "consistent with the capacity of the market to absorb the additional supply of equity and in consonance with the needs of PSUs...to raise fresh capital".
- For loss-making PSUs, it proposes provisions in the "shareholders' agreement to ensure that companies are not stripped of their saleable capital assets and the private strategic partner actively demonstrates his good faith through infusion of incremental capital and development of supportive business plans".
- A change in the procedure for valuation of shares so that all methodologies—including market valuation of assets, comparable companies and book value method—guide the process of arriving at the final estimation.
