PSUs likely to miss deadline on minimum public holding

Jul 22 2013

Public sector undertakings (PSUs) are likely to miss the August 8 deadline for meeting the minimum public shareholding norm. There are 10 PSUs with more than 90 per cent government stake, which they must bring down so that public holding is at least 10 per cent by the deadline.

These PSUs are Andrew Yule (93.3 per cent government holding), Scooters India (95.38 per cent), STC (91.02 per cent), Fertilizers & Chemicals Travancore (98.56 per cent), Neyveli Lignite (93.56 per cent), HMT (98.8 per cent), ITI (92.98 per cent), Hindustan Copper (94.01 per cent), ITDC (92.11 per cent) and National Fertilisers (97.64 per cent).

In the case of Neyveli Lignite, the centre has agreed to the Tamil Nadu government's demand to sell the stake to state government undertakings. A ministerial group at the centre has cleared the sale of 3.56 per cent in the company through institutional placement.

The stake sale in the case of STC, ITDC and National Fertilisers will be through an offer for sale (OFS) only after the ministerial panel fixes the OFS prices, according to investment bankers who wish to remain anonymous.

Though the Union government has assured the Securities and Exchange Board of India (Sebi) that the PSUs would meet the deadline, the market conditions are not conducive to a share sale without big discounts.

"All PSU stocks are already down. For a stake sale before August 8, the government has to give more discounts to attract investors, which will be very difficult," said Nisha Shah, associate director at Motilal Oswal Investment Advisors.

For listed private sector companies, Sebi had set the June 3 deadline to bring their public holding limit to at least 25 per cent. Sebi and its chairman U K Sinha are firm on the deadline for PSUs. "Our position is very clear. Any company which violates the minimum public shareholding norm should be punished," Sinha recently said in Delhi.