Last Updated : 20 October 2009 at 12:10 IST

NTPC stake sell to reduce Govt holding to 84.5%

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MUMBAI (Commodity Online): National Thermal Power Corporation Ltd (NTPC) (BOM: 532555) received the government’s nod for a partial sale of its stake.

Company stocks surged on the Bombay Stock Exchange (BSE) by over 4% in the morning trades. However, prices fell owing to the selling pressure at higher levels and remained at Rs.216.55 up 1.24% in the afternoon trading session. The stock surged by 4.25 per cent to touch a high of Rs 223 on BSE.

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The government, yesterday, approved divestment in two state-run power utilities — NTPC and Satluj Jal Vidyut Nigam — as part of a conscious policy to unlock value and make the public part owners of the national assets. The Cabinet Committee on Economic Affairs (CCEA) gave its approval to five per cent stake sale in NTPC, after which the government's holding in the power producer would come down to 84.5 per cent from the current 89.5 per cent.

The stock had underperformed the market in the past one quarter, gaining 4.29% as compared to the Sensex's return of 17.50%.

In 2007, NTPC had sought permission from the government to raise Rs.6,000 crore from the international market, but could not do so because of the opposition from Left parties to any lowering of the government's stake in Navaratna public sector undertakings. The government had then decided not to divest its stake directly or indirectly in Navratna companies.

The government's disinvestment proposal stems from the ruling United Progressive Alliance's vision of increasing "public ownership" in state-run firms, a recurring theme -- outlined in the President's address to Parliament, the Economic Survey and the finance minister in his Budget speech 2009-10.

In June this year, NTPC acquired a 44.6% stake in Transformers & Electricals, Kerala for Rs 31.34 crore from the Kerala state government. Transformers and Electricals Kerala makes and repairs heavy duty transformers.

NTPC will announce its Q2 September 2009 results on 23 October 2009. The company's net profit rose 27.1% to Rs 2193.62 crore on a 25.8% increase in net sales to Rs 12002.68 crore in Q1 June 2009 over Q1 June 2008.

NTPC owns and operates power generation plants that supply power to state electricity boards throughout India. The company also undertakes turnkey consulting projects to set up power plants.