Michael holding, the much feared West Indian fast bowler of the seventies, earned the epithet "Whispering Death" not just for his blistering pace but also for his smooth and silent approach to the wicket. Now Finance Minister Palaniappan Chidambaram certainly won't be as menacing as Holding if you plump the cherry in his hand, but "Whispering Death" is one turn of phrase that comes to mind when you consider the unobtrusive and swift manner in which the soft-spoken minister laid to rest any further prospects of disinvestment (of profitable public sector undertakings). Last fortnight, when addressing the press in Mumbai after a power lunch with industrialists, the self-styled minister for investments murmured: "After a prolonged period of investment drought, I see investments picking up. Bankers and industrialists have told me that a rush of investments is likely over the next 10 months."

The implication of that ostensibly feel-good (oops!) sound-byte wasn't lost on the chieftains straining to pick up any stray signal of pro-industry initiatives from the CFO of the United Progressive Alliance government. Mukesh Ambani, Chairman & Managing Director, Reliance Industries, had little doubt about what was screaming between those lines: It's goodbye to strategic sales of PSUs-of MTNL and BSNL, Shipping Corporation of India, Nalco, Hindustan Copper, NFL and RCF. For India Inc, it's back to the drawing board, as they begin to dig out mothballed blueprints for new projects and expansions.

"We can't keep waiting for the government sell-offs to happen. We have to concentrate on building new assets" Anil Agarwal/ Chairman/Sterlite Industries

Disinvestment may not cut much ice with the UPA government, but on a good day even the communists would probably grudgingly acknowledge some of its many merits. Just one of them is that disinvestment and privatisation can do their bit to contain the ballooning fiscal deficit-after all, between 2000-01 and 2003-04 the government sold strategic stakes in 28 PSUs and stashed up Rs 24,527 crore courtesy those efforts.

More significantly, though-at least from industry's point of view-PSU share sales also present companies with a quick, surefire avenue for achieving size and scale. Consider, for instance, Sterlite's acquisition of a 51 per cent holding in Balco in March 2001 for Rs 550 crore, which took the company's marketshare up from 4 per cent to 20 per cent in primary aluminium and also provided a readymade entry into rolled products and extrusions. Similarly RIL's acquisition of a stake in IPCL has reinforced the Ambani's dominance in petrochemicals.

Sterlite and Reliance may be relieved that Balco and IPCL, respectively, are in the bag, but then again the Ambanis have now got to kiss Hindustan Petroleum goodbye and Sterlite's Anil Agarwal can bid adieu to dreams of adding Nalco and Hindustan Copper to his metals empire. Others, like Essar Shipping for instance, can't aspire anymore for Shipping Corporation. So what do they do? The answer is simple: If you can't acquire, you begin to build. Pronto. As Amit Chandra, Managing Director, DSP Merrill Lynch, points out: "Companies that were sitting on cash and counting on significant M&A opportunities arising out of privatisation will have a greater interest in looking at greenfield projects, wherever it makes economic sense.''

"We will have to rework our growth plans. We will now look at more Greenfield and brownfield expansions" Kumar Mangalam Birla/ Chairman, Aditya Birla Group

Changing Tracks

Sure enough, corporate India isn't wasting any more time. "We can't keep waiting for the government sell-offs to happen. We have to concentrate on building new assets," shrugs Sterlite's Agarwal. Adds Director (Finance) Tarun Jain: "Growth in the next three years will come from greenfield expansions." Sterlite has an over $2 billion (Rs 9,018 crore) pipeline of brownfield and greenfield projects in aluminium, alumina, copper and zinc.

Kumar Mangalam Birla, Chairman of the Aditya Birla group, doesn't view the end of disinvestment as a setback. "It just means that we will have to rework our growth plans. We will now look at more Greenfield and brownfield expansions." Already group company Hindalco, which wants to be amongst the top 10 global players in aluminium, has revived the Rs 11,000 crore Aditya Aluminium project in Orissa, which was in cold storage since 1999. Another group company Indo-Gulf had its sights trained on National Fertiliser, the country's largest urea producer, and Madras Fertiliser. Now, as DSP Merrill's Chandra explains: "Since a number of fertiliser companies are sitting on huge cash, one will see investment happening once there is clarity in the fertiliser policy." K.K. Birla group Zuari-Chambal Fertilisers and Chemicals, for its part, is reportedly focusing on a 1 million tonne urea project in south Asia, now that NFL is off the radar.

Reliance may be relieved that IPCL is in the bag, but then the Ambanis have to now kiss Hindustan Petroleum goodbye Mukesh Ambani/ CMD, Reliance Industries

Companies in industries like steel, which has been riding an upcycle for some time now, are working overtime to make up for the days lost. Jindal Stainless for instance, which had extended its bid for the Steel Authority of India's Salem steel plant, decided in mid-May that there was no point in waiting. And waiting. "We have already wasted two years waiting for Salem to happen. Now that the steel cycle still looks positive, a decision was taken last month to expedite a downstream expansion by setting up a CR steel plant," says Arvind Parakh, Director (Finance), Jindal Stainless. The company is going in for a brownfield expansion of its cold rolled capacity at Hissar in Haryana and will spend about Rs 150 crore to up its CR capacity from 90,000 TPA to 1,40,000 TPA in the next eight to 10 months.

Clearly, however, acquisitions have their advantages, the biggest one being immediate capacity addition. If, for instance, Essar Shipping had succeeded in bagging SCI, it would have at a stroke acquired a fleet of 87 vessels, accounting for 42 per cent of the national tonnage. Now Prashant Ruia, Director, Essar Shipping, says: "We will focus more on acquiring individual vessels." Reliance too, which was hoping to acquire 34 per cent in HPCL, will now have to pull out all stops to put up its own retail outlets. The target for 2004-05: 2000 outlets, out of the rights for 5849. RIL will also miss HPCL's distribution infrastructure as that would have helped in selling the processed products from Reliance's 33 million tonne Jamnagar refinery. Chidambaram may be right about the rush of investments, but given a chance industry would have preferred the shorter cut of disinvestment to gain size and scale.