After using the mechanism to reduce its holding in Indian Oil Corporation, the Government may opt for the cross-holding route to dilute its stake in Bharat Heavy Electricals Ltd. Cross-holding involves selling shares of a central public sector enterprise (CPSE) to other CPSEs.

“We have ruled out going to the market (to sell the Government’s stake in BHEL). Now, one of the options is cross-holding,” confirmed Heavy Industries Minister Praful Patel, speaking to newspersons on Wednesday.

The Government is looking to sell a 5 per cent stake stake in BHEL, which could give it ₹1,300 crore. Recently, the Centre sold 10 per of its stake in refining-cum-retailer Indian Oil Corporation to ONGC and Oil India.

Patel, who is part of the ministerial group handling the issue, felt the cross-holding method ensures that the “family silver is not sold at throwaway prices”. On Wednesday, the BHEL stock closed at ₹170.70, gaining 3.86 per cent.

Lock-in provision The one-way cross-holding method will have no lock-in provision. In other words, the investing CPSEs will be able to sell the shares any time they want. The same formula has been prescribed for Indian Oil. It is expected that companies such as NMDC, NTPC and Coal India will pick up stakes in BHEL.

Selling shares to other PSEs helps the Government in two ways – the Centre gets money to fix the fiscal deficit, and, second, the sale will not beat down the already subdued share price.

Earlier, the Cabinet Committee on Economic Affairs had approved the 5 per cent disinvestment in BHEL either through the auction method or an offer-for-sale via stock exchanges.

However, the Heavy Industries Ministry vetoed the proposal saying the current market situation is not favourable and offloading in the market would further depress the share price.

The disinvestment process becomes critical at a time when the Centre is making every effort to augment its revenue and keep the fiscal deficit under control.

The Central Government is hoping to mop up ₹40,000 crore by selling stakes in various central public sector enterprises and ₹14,000 crore by selling its residual stakes in various non-PSEs, such as Hindustan Zinc, Balco and Axis Bank.

So far, it has managed to mobilise less than ₹3,000 crore through disinvestments. And residual stake sales are yet to begin, though the Centre has cleared the sale in Hindustan Zinc and the process is on for Axis Bank.

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