India to let some state firms spend more on purchases
Monday, 28 December 2009
NEW DELHI, Dec 27 (Bloomberg): India increased the amount some state-run companies can spend to acquire assets and set up joint ventures, allowing them greater freedom to expand and become globally competitive.
The "maharatna" companies will be able to make purchases in India and overseas for as much as 50 billion rupees ($1.1 billion) without government approval, according to a statement issued after a Cabinet decision today in New Delhi. Select state-run companies are allowed to spend as much as 10 billion rupees on acquisitions without government permission.
Indian Oil Corp., the nation's biggest refiner, purchased a stake in Oil India Ltd. from the government in September, the only acquisition among the top 20 in India this year by a state- controlled company. The autonomy will help the selected companies speed up their decision-making process, analyst Jagannadham Thunuguntla said.
"It will give them a free hand," said Thunuguntla, chief strategist at SMC Capitals Ltd. in New Delhi. "This will elevate the stature and position of such public-sector companies."
The index of 48 state-run companies on the Bombay Stock Exchange rose 0.4 per cent. The gauge gained 79 per cent this year, matching the increase in the key Sensitive Index. Oil & Natural Gas Corp., the nation's biggest energy explorer, and NTPC Ltd., India's biggest utility, are among the companies that may become eligible for this status, according to data compiled by Bloomberg.
The "maharatna" companies will be able to make purchases in India and overseas for as much as 50 billion rupees ($1.1 billion) without government approval, according to a statement issued after a Cabinet decision today in New Delhi. Select state-run companies are allowed to spend as much as 10 billion rupees on acquisitions without government permission.
Indian Oil Corp., the nation's biggest refiner, purchased a stake in Oil India Ltd. from the government in September, the only acquisition among the top 20 in India this year by a state- controlled company. The autonomy will help the selected companies speed up their decision-making process, analyst Jagannadham Thunuguntla said.
"It will give them a free hand," said Thunuguntla, chief strategist at SMC Capitals Ltd. in New Delhi. "This will elevate the stature and position of such public-sector companies."
The index of 48 state-run companies on the Bombay Stock Exchange rose 0.4 per cent. The gauge gained 79 per cent this year, matching the increase in the key Sensitive Index. Oil & Natural Gas Corp., the nation's biggest energy explorer, and NTPC Ltd., India's biggest utility, are among the companies that may become eligible for this status, according to data compiled by Bloomberg.