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India plans to sell stakes in five state companies

India said on Tuesday that it plans to raise close to $3 billion by selling additional stakes in five state-run companies by the end of March.

The Finance Ministry has invited bids from bankers who want to manage the sale of the government stakes in these companies, in a move that would generate much-needed revenue to help reduce India's fiscal deficit.

The government plans to sell 10% stakes in National Aluminium Co. Ltd., iron-ore mining company NMDC Ltd. and Indian Oil Corporation Ltd, according to notifications posted on the Finance Ministry's website.

It also plans to sell 5% stakes in Bharat Heavy Electricals Ltd. and Dredging Corporation of India Ltd.

At the latest stock prices, the stake sales would raise about 176 billion rupees ($2.88 billion).

While the ministry still needs cabinet approval before it can go through with the stake sales, it is starting the process of appointing bankers so it will be ready to move quickly once the approval comes through, said an official who asked not to be named. Cabinet approval is expected soon, he said.

Many of India's largest state-run firms are majority owned by the government but listed and partly owned by private investors. New Delhi regularly uses government share sales to bring in more investors and raise revenue.

This year's stake sale plan got off to a slow start, but got a big boost after the government sold 10% of Coal India Ltd. late last month , helping raise about $3.6 billion.

marketwatch