NTPC FPO - Disinvesting or Disinteresting?

The subscription figures are provided below:

Retail - 0.1646

QIB  -  2.1755

NII   -  0.4318

Emp -  0.4385

My take:

QIP route would have been much cheaper than FPO.

It could have fetched better valuations, taken less time and the high cost of printing paper would have been avoided. I sometimes wonder if people up in the ladder have lost common sense or the lack of it is the key ingredient to be at the top.

The key players were LIC and SBI.
It simply means you exchange a coloured piece of paper kept in your right pocket and with another coloured piece of paper kept in your left pocket. While you do that, you manage to reduce the fiscal deficit by infinitesimal amount. On the other hand, in coming years, RBI will ask SBI to de-risk itself by taking less equity exposure and IRDA will cap investments by LIC to 10% in individual stocks. The profit these instituitions will make, will eventually go to government. Its a merry go round.

We can be fooled once or twice or thrice, not always.
The purpose of divestment was to reduce fiscal deficit, increase public shareholding, and reward public(?). NHPC wasn't cheap by any means. Still, people showed faith but it didn't deliver. As a result, OIL and NTPC suffered.


Rs. 201/- wasn't too much to pay. It was decent enough to attract people. A company which is the world's second largest independent power producer, Asia's and country's single largest electricity producer deserved much more. Meanwhile, other companies which do not produce a single Watt are commanding higher valuations.


If fiscal deficit is to be reduced, 3G auction is the biggest hope; a hope which is diminishing with each day. History tells us that delay results only in loss of opportunity in terms of revenue. Air-India, MTNL, BSNL, Indian Railways, IFCI and many more need medication. Maruti and VSNL are excellent examples of disinvestment. If you want to serve people or make profit, there are better ways. Don't burden yourself with agriculture rebates, and oil-bonds.


Next blog will be on Income Tax. 
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