Saturday, March 24, 2012

SU-UTI disolution, ITC, Axis bank, Larsen and tubro.

                       Yesterday government had announced for Specified Undertaking of The Unit Trust of India (SU-UTI) is to be dissolved to create an asset manager. Government have facing problem of disinvestment in PSU in last fiscal year. Government have target of 40,000 crore and reality government can raise 15000 crore through Oil and Natural Gas Corporation limited (ONGC). But this divestment was not much successful. This divestment had taken by insurance company about 98%. Life Insurance Corporation Limited (LIC) had taken all this shares of government. Government is facing fiscal deficit due to this problem. There are more companies for disinvestment. There are companies like Bharat Heavy Electricals Limited (BHEL), Oil India, Steal Authority of India (SAIL), etc. But from ONGC government had learned something. Government are now want to play safer.
                      Government have another plan for raise money and discussed many times is Government holding through SU-UTI in companies. This is safest rout for government to raise money. Government holding in three major companies through this skim. That companies are not PSU companies but there is not person or owner of this company. All three are major companies. That companies are ITC limited, Axis bank, Larsen and Tubro limited. Its assets include stakes in Axis Bank (23.58%), ITC (11.54%) and Larsen &Toubro (8.27%), totaling `38,046 crore in value. This money is separating government and using for purchase of this stake from government. It means this money will go to government. This is way of raising money and reducing fiscal deficit. On either side government facing problem due to political conditions. State election had given negative signal for government. Now fiscal deficit again become cause for monetary tightening. This is another round for inflation and government again face problem due to inflation. Other site is slowing of growth is concern for government. Growth is slowing due to interest rate hike. Interest rate hike done for inflation control. Again rate cut for growth is invitation for inflation. Reserve Bank of India is blaming on fiscal deficit for inflation. Overall government of India want to come out of all this and this decision is one part of this step toward relief from this situation. All this will impact on companies ITC, Axis bank, L&T. All money this companies have short fall will raised from retail investor. How this gap become headache for this companies. What is impact of this decision  on this companies in future will come to know in future days.