Press Release
The CPI (M) asserts that, it is the money of the people of India which has created Navratna PSUs like ONGC and GAIL and the Govt. of the day is only a caretaker and proxy shareholder of the national wealth. NDA Govt. has no right to liquidate these assets at sunken price to cover up their financial profligacy and rickety state of finance. NDA Government started its term with selling of 25% of GAIL’s share in Nov. 99 at a throw away price of Rs.70/- per share, majority of which were acquired by M/s British Gas & Enron, competitors of GAIL, and is ending its term with another dirty deal of selling grossly under priced shares of India’s national prestigious companies like ONGC and GAIL.
National Loss – Price Earning Ratio:
Without going into the irrationality of disinvesting/privatising profitable and strategic PSUs for making up budgetary deficit, IPO offerings of ONGC and GAIL has cost the nation a loss of Rs.5000 to 6000 crores on a conservative estimate on account of underpricing of shares. In the case of ONGC & GAIL, the Price Earning Ratio is ranging from 9 to 10. {For ONGC the Earning per share was Rs.74 approx in 2002-2003 and for GAIL it was Rs. 19.38. Price offered per share for ONGC is in band of Rs.680-750 and for GAIL it is Rs.185}. ONGC, a Fortune 500 company and GAIL, the only gas transportation company in the country, are having a large equity base compared to private companies and huge reserves as well. The international value of such oil-gas based assets in terms of price earning ratio would not be under any circumstances less than 15 if not 20. How much does the country lose? Based on a minimum price earning ratio of 15, the under pricing would be in the range of Rs.5000 to 6000 crore for sale of 142 million shares of ONGC and 84 million shares of GAIL. Yet this is being tomtomed as another shining glory by the Govt.
Govt’s annual earning from ONGC and GAIL Is more than the one time sale of 10% share:
In 2002-03, ONGC paid Rs 3798 crore as dividend, Rs 4500 crore as cess (at the rate of Rs 1800/- ton of oil produced while the private oil producing companies are exempted from paying the cess) and Rs 12,377 crore as Central Government duty and taxes (excluding Sales Tax paid to the State Governments. GAIL paid Rs 427 crore as dividend, and Rs 1302 crore as Central Government duty and tax. Thus for the year 2002-03, ONGC & GAIL paid Rs 8725 crore as dividend and cess and Rs 13,679 crore as Government duties and tax. And still the Government boasts of one time sale for Rs 11000 crore of assets which fetches Rs 22,000 crore per year to Government exchequer!
Price of IBP share – from Rs 1551 to Rs 620 per share!
When IBP disinvested through strategic sale route in February 2002, IOC another PSU, purchased 33% of government shares in IBP at a cost of Rs 1551 per share. Later IOC purchased 20% share of IBP from market at the same price per share. Now the same Government which had approved purchase price of Rs 1551 per share, only two years ago, is now selling govt’s remaining 26% shares in IBP at a price of Rs 620 per share.
If this is not a scam, then what else it is?
CPI(M) appeals to the Hon’ble President of India who actually holds the share on behalf of the people of India to seek explanation form the caretaker Govt. on the national loss from this sale at the expense of the taxpayer and to put a hold on the share transaction and order for an enquiry about these dubious deals.
Name the Share Market Manipulators
The loquacious Disinvestment Minister owes an explanation to the nation for suppressing information regarding the identity of the bear cartel share market operators who as per his information, had hammered the share market, warranting his intervention during the recent disinvestment IPOs. The Minister claimed he knew them but did not name them. It is not a private matter between the Minister, the Government and scam stars. People of this country who have suffered immensely because of the share market scams, have the right to ask the Minister to share his information with the nation so that punitive action can be taken against those who are involved. Otherwise it can be presumed that there is a nexus between the Government, share market operators speculators and FIIS for manipulating the market where India’s pride – its national oil companies like ONGC & GAIL are being bartered for a song.
ONGC & GAIL – irreplaceable national assets
CPI(M) further ridicules the hullabaloo created on reported fund-parking by FIIs or investors like Buffet or Sores in ONGC and GAIL. ONGC has not become a fortune 500 company on certification of FI and FIIs. It has become a global major because of its own strong fundamentals created by sweat and money of people of India. So is GAIL. They are there in spite of Vajpayees, Shouries and not because of them. Fis, FIIs, and speculators are eyeing them for “creeping acquisition” of these irreplaceable national assets – the Navratnas. It is a matter of shame that instead of protecting such assets, Govt. is gloating over their acquisition by foreign investors.
GAIL 427