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Centre Sold Larsen & Toubro Stake to Raise Rs 4000cr. Know Why

The government sold a 2.5% stake in Larsen & Toubro (L&T) on Wednesday, 21st June, 2017 raising about Rs4,000 crore as part of its disinvestment programme of Rs72,500 crore for the current fiscal year.

The stake, held through the government-owned Specified Undertaking of Unit Trust of India (Suuti), was sold through block deals in the stock market. On November 4, 2016, the government had sold a 1.62% stake in the engineering company via bulk trade to fetch Rs2,096crore. Suuti owned a 6.68% stake in L&T as of the end of March.

The share price of L&T on Wednesday closed at 1,752.50, up 0.11%, on BSE. The BSE Sensex closed at 31,283.64, down 0.04%. Including the latest stake sale in L&T, the Centre has raised Rs4,602 crore so far, or about 9% of the current year’s target. The government’s 2017-18 divestment target is 58% higher than the receipt of Rs46,247 crore in 2016-17.

Apart from PSU listings, sale of the government’s SUUTI stakes and further pruning of Centre’s stakes in several PSUs like NTPC and PFC, buybacks of shares by PSUs and a proposed new PSU ETF are expected to boost the disinvestment revenue this year. The Centre plans to raise about Rs15,000 crore in 2017-18 from strategic disinvestment, which includes sale of minority stakes in companies held by SUUTI as well as privatisation.

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