Date:18/01/2006 URL: http://www.thehindubusinessline.com/2006/01/18/stories/2006011803050100.htm

Back Govt to divest 5 pc equity in PFC — Co to issue fresh shares equivalent to 10 pc its equity

Our Bureau

New Delhi , Jan. 17

THE Government will be disinvesting five per cent of its equity in Power Finance Corporation to the public. PFC will also issue fresh shares equivalent to 10 per cent of its equity base to the public simultaneously.

"The Cabinet has cleared the PFC initial public offer. The issue will be on the lines of the NTPC disinvestment process. The Government will piggyback to divest its stake," the Power Secretary, Mr R.V. Shahi, said on the sidelines of a conference on hydropower here on Tuesday.

Mr Shahi, however, did not divulge any details on either the timing or the pricing of the public issue. The PFC public offer is part of the Government's plan to disinvest small stake in profit-making non-navratna companies.

The Centre currently holds 100 per cent stake in the non-banking finance company (NBFC), which exclusively funds power sector projects.

In 2004, the Government had sold around 5.5 per cent of its equity in NTPC through its initial public offer (IPO). Last month, the Union Cabinet decided to allow PFC to float a public issue to sell 10 per cent of the company's authorised capital base of Rs 1,030 crore.

Alongside, the Government will disinvest 5 per cent of its existing equity in the company.

PFC had posted a net profit of Rs 470 crore over a total income of Rs 1,563 crore during the first half of this fiscal.

In 2004-05, the Corporation had reported a net profit of Rs 984 crore over a total income of Rs 3,047 crore.

The company has reserves of Rs 5,350 crore while earnings per share (EPS) is Rs 4.56. The disinvesment proceeds from the issue, according to the commitment made by the UPA Government, will go to the National Investment Fund for use in social sector projects and revival of ailing public sector undertakings.