With the green signal for divestment from the Cabinet Committee on Economic Affairs (CCEA) on Thursday, the Bangalore-based Hindustan Aeronautics Ltd (HAL) should enter the stock market the next financial year, starting April 1, 2013.

Announcing the CCEA’s decision, Finance Minister P. Chidambaram said: “It has approved to divest 10 per cent equity in HAL out of its holding of 100 per cent. Five per cent discount on the issue price will be allowed for retail investors as well as to eligible employees of HAL applying under the employees’ reservation portion.”

Chidambaram said it would be basically an initial public offer (IPO) and for this purpose, the HAL board would have to be restructured. He said the IPO would be issued next fiscal. The Government is waiting for the report of an expert group it had set up under B.K. Chaturvedi, member of the Planning Commission, to look into HAL’s restructuring.

This is the ninth public sector company to get the Government nod to disinvest. However, actual sale is yet to take place in any of the previous eight cases.

After deferring the initial IPO of Rashtriya Ispat Nigam Ltd thrice, the Empowered Group of Ministers (EGoM) decided to hold disinvestment of Nalco, at least till December.

Asked about pending disinvestment cases, Chidambaram said the decision was on a case-by-case basis. For example, Nalco disinvestment was deferred on hope that stronger showing in the October-December quarter will fetch higher valuations. “We have to collect Rs 30,000 crore through disinvestment and now you can draw a timeline accordingly,” he said.

After seven months in the current fiscal, the Government is yet to bring out any issue.

With tax collections lagging, subsidy burden rising, and spectrum sale unlikely to fetch the targeted Rs 40,000 crore, disinvestment is vital to the Finance Ministry’s effort to control the fiscal deficit within the revised target of 5.3 per cent.

> Shishir.Sinha@thehindu.co.in

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