Making a case for strategic disinvestment of public sector units rather than selling shares in the market, disinvestment minister Arun Shourie today said that the Unit Trust of India has suffered notional losses of over Rs 5,000 crore on its purchase of public sector shares between 1991-92 to 1994-95.

He was making a presentation on the government’s decade-long disinvestment programme. Shourie said that minority sale of shares of even blue chip PSUs like Indian Oil and Videsh Sanchar Nigam were made at a maximum price-earning (PE) ratio (price per share to earning per share) of six during 1991-92 to 1999-2000.

However, in case of strategic disinvestment, which the government has undertaken recently, it has managed to obtain fairly high PE ratios for the comapnies. Bharat Aluminium Company (Balco) was sold for a PE ratio of 19, while the PE in CMC was 12.

He said the government had realised a total of Rs 1,128 crore through strategic sale in Balco, Modern Food, CMC and Hindustan Teleprinters. This amount, if put in a bank, would earn the government Rs 112.85 crore per annum at a 10 per cent interest rate . As compared to this, the average dividend received by the government over the last eight years on equity sold was Rs 7.26 crore.