Nature of PSU's

[vasa1]

Udayan's views on the road ahead ....

But the speech-to-text makes it a bit more difficult to understand!

[vasa1]

More scathing comments on PSU's, governance, yes men, etc.

When unions talk sense and the government doesn't

R Jagannathan

One event was the death of Subir Raha, former chairman of Oil and Natural Gas Corporation (ONGC), India’s premier oil producer. Raha was the last public sector manager with the gumption to stand up to babudom and fight for autonomy. He fought the minister, he fought the bureaucrats, and as long as he was there, ONGC had a fighting chance of retaining its operational autonomy. His untimely death earlier this month — he was just 62 — should give all public sector managers reason to examine their own powerlessness and what they should be doing about it

Raha was removed a few years ago I think for not seeing eye to eye with the then Petroleum Minister M.S. Aiyar.

[vasa1]

PSU IPO's aren't getting the welcome the government expected! Relatively unknown companies seem to be getting a better response. So the appetite is there.

Is it the size or the price or the marketing? Link

I'm getting worried about my dear Engineers India ...

[vasa1]

Today's ET carries a front page story on "Govt looks to institutions to bail out PSU share sales".

Although the article quotes anonymous sources, it is a sign of the difficulty in unloading massive amounts of shares.

The worrying aspect is that "large institutional investors" will be involved. Will there be some not-so-subtle arm-twisting? Won't this affect the profitability of these investors, probably PSU's, down the road?

[Alchemist]

Originally Posted by vasa1

Won't this affect the profitability of these investors, probably PSU's, down the road?

How will it effect the profitability of PSUs?

It will be similar to a QIP.

As far as I understand, government companies won't put their own money in these issues.

LIC, PSU-run mutual funds etc may bid, but then they don't invest their own money. Thus, their profitability won't be affected.

[vasa1]

Don't companies, excluding mutual funds and insurance companies, also have investments in shares?

What if they are asked to buy stock of a company being "disinvested" at a price they normally wouldn't think of?

[Alchemist]

Originally Posted by vasa1

Don't companies, excluding mutual funds and insurance companies, also have investments in shares?

What if they are asked to buy stock of a company being "disinvested" at a price they normally wouldn't think of?

PSU companies do invest in shares of other companies, but most of them don't have much "free cash".

By free cash, I mean cash that isn't need for future expansions.

As most of the bigger PSUs have lot of expansion plans. the managements are unlikely to agree for such investments.

When IOC had taken over IBP in 2002, the government's disinvestment process had been criticized because many felt that a PSU buying shares from government wasn't really "disinvestment".

If PSUs again start buying shares from the government, the government may face similar criticism.

As of now, LIC is the only PSU that is carrying a lot of free cash. If the government fails to set realistic goals for its disinvestment program, LIC may end-up buying most of the shares.

[vasa1]

Originally Posted by vasa1

Today's ET carries a front page story on "Govt looks to institutions to bail out PSU share sales".

Although the article quotes anonymous sources, it is a sign of the difficulty in unloading massive amounts of shares.

The worrying aspect is that "large institutional investors" will be involved. Will there be some not-so-subtle arm-twisting? Won't this affect the profitability of these investors, probably PSU's, down the road?

Problem solved! PSUs need only 10% free-float.

If only all our problems could be solved by notification .

Only 15 state-run firms will have to comply with the new 10% norms as opposed to the earlier 35, according to a report by SMC Capitals. These include MMTC, Hindustan Copper, Neyveli Lignite, National Fertilsers and HMT.