The analysis was done over a period of 10 years before and after privatisation. It further compared their performance to that of the peers in same industry group.
“The trends confirm that the performance of the privatised CPSE and its peers is quite similar till the year of privatisation. However, post-privatisation, the performance of the privatised entity improves significantly when compared to the change in the peers’ performance over the same time period,” the Survey noted.
For instance, the net worth of the 11 privatised firms increased from Rs 700 crore before privatisation, to Rs 2,992 crore after privatisation, “signalling significant improvement in financial health and increased wealth creation for the shareholder”.
Hence, the aim of privatisation or disinvestment should be to maximise the government’s equity stake value.
The Survey mentioned that the disinvestment of government’s shareholding of 53.29 per cent in Bharat Petroleum Corporation (BPCL) led to an increase of around Rs 33,000 crore in the value of shareholders’ equity in BPCL when compared to Hindustan Petroleum Corporation. “This translates into an unambiguous increase in BPCL’s overall firm value, and thereby an increase in national wealth by the same amount,” it said.
Between 2016-17 and 2018-19, strategic sales accounted for around 28 per cent of the government’s total disinvestment proceeds on an average. For 2019-20, the government has set an ambitious target of Rs 1.05 trillion towards disinvestment. So far, the government has garnered only about Rs 18,000 crore.