SAIL's share sale is proposed to take place through a two-phased FPO, which will see the government selling 10% of its equity in the company and the steel giant raising fresh equity in the same proportion
The steel ministry on Tuesday said that it will send the 20% share-sale proposal of the country's largest steel maker Steel Authority of India Ltd (SAIL) to the Union Cabinet this week, reports PTI.
"The share-sale proposal of SAIL will be sent to the Cabinet this week. Thereafter, the Cabinet secretary will take a final call on it," steel secretary Atul Chaturvedi told reporters on the sidelines of a conference to announce the price band of NMDC Ltd's follow-on public offer (FPO).
SAIL's share sale is proposed to take place through a two-phased FPO, which will see the government selling 10% of its equity in the company and the company raising fresh equity in the same proportion.
"The first phase is expected to happen in 2010-11 and the next in 2011-12, but both would be based on the market conditions," Mr Chaturvedi added.
The government holds a little over 85% equity in SAIL.
The Union government plans to raise the money to part fund its massive social and infrastructure programmes while the steel maker would partly finance its Rs70,000-crore expansion plan through the share-sale proceeds.
"(The) share sale is expected to fetch Rs8,000 crore in each phase collectively to the government and the company. Thus, the total proceeds of the FPO could be around Rs16,000 crore," he said.
The final amount would, however, depend on the price the government fixes for the FPO. Share sale in Satluj Jal Vidyut Nigam, earlier scheduled for the current fiscal, will now be initiated in the next fiscal.
Besides, the Cabinet has given its nod for further stake sale in Engineers India.
As per the Cabinet decision, all listed profitable public sector units (PSUs) should have a public holding of at least 10% and all profitable unlisted PSUs should be listed over the next few years.
According to these criteria, as many as 60 state-run companies are eligible for disinvestment.
Earlier, revenue secretary Sunil Mitra, former disinvestment secretary, had said that the department expected some of the big PSUs like Coal India, Bharat Sanchar Nigam Ltd (BSNL) and SAIL to be divested in the next fiscal.
After a continuous drain of Rs7,315 crore over the past five months, equity schemes are back in the limelight
Happy days are here again for equity mutual fund (MF) schemes which saw Rs1,514 crore of net inflows in February after an outflow of Rs7,315 crore between August 2009-December 2009. During February, equity inflows jumped 54% from the Rs980 crore recorded in January.
“Markets are doing well and people believe that they will continue to do well going further. It could also be because of tax-saving schemes (ELSS) which are popular in February-March,” said Vivek Rege, chartered financial analyst (CFA) and managing director of VR Wealth Advisors Pvt Ltd.
Net inflows in equity MFs started vanishing and moved into positive territory post December which saw Rs2,185 crore of net outflows. In February, redemptions of all schemes stood at Rs7,52,798 crore.
During the same month, sales of all schemes fell 14% to Rs7,59,163 crore compared to Rs8,84,738 crore a month ago.
January saw the launch of three new open-ended equity funds like Axis Equity Fund, Fidelity India Value Fund and Sundaram BNP Paribas Select Thematic Funds—PSU Opportunities, while there were no new equity schemes launched in February. The Bombay Stock Exchange’s 30-share index, the Sensex, remained flat at 16,429 points in February from 16,357 at end-January.
Assets under management (AUM) of Equity Linked Savings Schemes (ELSS) are up by 1% at Rs22,664 crore compared to last month. ELSS schemes recorded a 25% hike in net inflows at Rs335 crore from Rs268 crore in January.
The views expressed by Mr Fali Poncha in this column are his personal views and not those of the company he serves
A Mediclaim policy is the most valuable investment an individual or a family can make, as it protects one’s savings/capital, which would otherwise get eroded by major medical expenses incurred through hospitalisation. It is, therefore, unquestionably incorrect to suggest that anyone is better off without taking a Mediclaim cover.
There is no doubt that all claims rejected would stand scrutiny.
There is also no doubt that the functioning of third party administrators (TPAs) generally leaves much to be desired. They have been granted total authority without the obligation to be accountable for their decisions and insurers plead helplessness when approached by an insured whose claim has been rejected or reduced unjustifiably.
The very functioning of TPAs has several deficiencies. When denying cashless authorisation, they do not distinguish between planned hospitalisation and emergency hospitalisation as in both situations they demand to be advised of final diagnosis and final line of treatment.
In most cases, the TPA’s infrastructure does lag way behind the volume of work, resulting in uncalled-for delays.
That the TPA system suffers from several deficiencies is known to the insurers, the General Insurance Council (GIC) and the Insurance Regulatory and Development Authority (IRDA). Several months back, the IRDA nominated a high level committee to submit its findings on the TPA system. However, to date, the general insuring public has no information as to the findings of this committee.
Almost from the beginning, insurers have applied little underwriting to this class of business. In the mindless competition for corporate business, they have willingly written group Mediclaim for corporates at loss ratios ranging from 200% to 400%, whereas the loss ratio for individual buyers of Mediclaim was consistently at sustainable levels.
Interesting insights would emerge if statistics were to be published relating to the following:
• The average rate of premium charged for individual covers and group covers i.e., the total premium as a percentage of total sums insured.
• The percentage of rejected claims to total claims submitted under individual/family policies and corporate group policies.
On the value of diagnostic tests, pre-granting of cover in order to determine pre-existing ailments would entail additional costs, but the result could be easily manipulated through resorting to medication pre-tests—like beta-blockers by hypertensive patients and sugar-level reduction medication by diabetics. A better and cost-effective solution would be to obtain medical history details from the family doctor along with the proposal form.
There are other failures which are difficult to guard against. The primary one being higher medical and surgical costs being charged by doctors to patients having Mediclaim cover and unnecessary tests being repeated by hospitals in order to inflate the per-bed/per-day recovery.
Having said that, there is no denying the fact that for insurers as a whole, total claims in a year exceed total premium recovered by 40%. This runs counter to the very principle of insurance which is to recover from many to pay a few, to provide an essential service at a fair cost.
I am of the firm opinion that if Mediclaim covers are underwritten on sound and fair lines and claims settled fairly and expeditiously, the industry could manage this class of business at breakeven or possibly a small margin of profit. With the considerable expertise within the insurance industry and the authorities overseeing the industry, I am confident that this can be achieved provided there is a combined will to tackle the problems firmly but fairly.
Any advice to the effect that it would be better to go self-insured would be akin to throwing the baby out with the bathwater. All that needs to be done is to ensure that the quality of the bathwater is good for the baby’s health.
(The author is chairman of International Reinsurance and Insurance Consultancy Services Pvt Ltd, an insurance brokerage firm)