The Union Cabinet on 18th May 2022, has approved the proposal for empowering the Board of Directors of the Holding / Parent Public Sector Enterprises (PSE) to recommend and undertake the process for Disinvestment (both strategic disinvestment and minority stake sale) or closure of any of their subsidiaries / units / stake in Joint Ventures (JV).
Further it has also empowered Alternative Mechanism to accord ‘in principle’ approval for disinvestment (both strategic disinvestment and minority stake sale) / closure of subsidiaries / units /sale of stakes in JVs of Holding / Parent PSEs [except the disinvestment (minority stake sale) of Maharatna PSEs which was delegated to them and review the process of disinvestment / closure by Parent / Holding PSEs.
The process for strategic disinvestment would be open and based on the principles of competitive bidding. The guiding principles would be laid down by DIPAM ( Department of Investment and Public Asset Management) For closure, DPE (Department of Public Enterprises (DPE) shall issue guiding principles.
The proposal intends to reform the functioning of PSEs, by allowing greater autonomy to the Board of Directors of the Holding PSEs for taking decisions and recommend for timely existing from their investment in Subsidiaries / Units or JVs, which will enable them to monetize their investment in such subsidiaries/units/JVs at an opportune time or close their loss-making and inefficient subsidiary/unit/JV at right time. This will result in expeditious decision making and saving of wasteful operational/financial expenditure by the PSEs.
