ITC: Government mulls selling stakes in Hindustan Zinc Ltd, ITC; DIPAM begins talks

The government is considering the sale of its stakes in (HZL) and ITC among others to meet the disinvestment target for the current fiscal, said people with knowledge of the matter.

The delay in the strategic sale of Pawan Hans,

(SCI), , and Bharat Petroleum Corporation Ltd (), and the scaled-down public offer of Life Insurance Corporation () of India have forced the government to consider other options.

The Centre has a 29.54% stake in HZL (294.20) worth about ₹37,000 crore while it holds 7.91% of

(279.95) through the Specified Undertaking of the Unit Trust of India (SUUTI), which is valued at about ₹27,000 crore, based on Friday’s closing price on the BSE.

Details of an offer for sale (OFS) and the extent of divestment are still being worked out. The government expects the process to be completed by September.

The government has pegged the disinvestment target for FY23 at ₹65,000 crore. LIC’s public offer raised about ₹20,560 crore earlier this month. The Department of Investment and Public Asset Management (DIPAM) has begun internal discussions on stake sales in HZL and ITC, said one of the people cited above.

Strategy Tweaked

“We have reworked our strategy. Even in the current market situation, we expect stake sales in these to fetch us ₹64,000 crore,” the official said.

DIPAM is working on technical aspects of the OFS and the note will be sent for cabinet approval by June 15, the official said.

“We are aiming to conclude these before September,” said the official cited above. “But given the global situation, there are factors beyond our control so it would not be wise to give a definite timeline. We are flexible with timing.”

The department held some preliminary discussions with the

Group last week after it withdrew litigation. Vedanta holds a majority stake in HZL, having acquired it in an earlier round of disinvestment in 2002. The Centre has raised about ₹23,575 crore through disinvestment so far in the current fiscal year. Of this, ₹20,560 crore was from the LIC IPO and ₹3,000 crore from the sale of 1.5% in state-run explorer .

The strategic sale of BPCL has been called off due to a lukewarm response from investors in view of geopolitical developments. The divestment of SCI is also running behind schedule, though the government is hopeful of completing the transaction in the current financial year.