Govt raises Rs6,700 cr from sale of 2% SUUTI stake in ITC

The government has raised Rs6,700 crore (about $995 million) through sale of a 2-per cent stake in consumer goods and cigarettes manufacturer in block deals on the stock exchange, reports quoting sources close to the development said.

State-owned Specified Undertaking of Unit Trust of India (SUUTI), which owned 11.12 per cent of ITC as of end-December, trimmed that stake via block deals in the market..

Life Insurance Corp (LIC), that invests heavily in government divestments, bought the stake.

ITC shares rose as much as 5.5 per cent in early trade to a record high of Rs292.15 after news of the sale.

Neeraj Gupta, secretary of the disinvestment department that looks after sale of government stake in companies, confirmed the deal, but did not provide details.

The government had palanned to raise around Rs45,500 crore from sale of stake in state-owned companies in the financial year ending March to help fund its fiscal deficit.

Although the sale of stake in ITC is not part of PSU divestment, this along with the Rs3,100 crore sale by SUUTI in engineering group Larsen & Toubro has helped the government take actual divestment so far this financial year to about Rs31,000 crore,

The ITC shares were sold at an average price of Rs275.85, reports quoted one of the sources as saying. This, however, is 0.3 per cent lower than the stock's Monday closing price of Rs276.80.

ITC shares were up 0.5 per cent at close of trading on Monday.

A Budget provision for a lower-than-expected hike in excise duty on cigarette also helped ITC shares to firm up ahead of the stake sale.