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All Central Public Sector Undertakings (CPSUs) have complied with the minimum public shareholding norms prescribed by the market regulator, the Securities and Exchange Board of India (SEBI), the deadline for which ended on August 8.
“SEBI’s deadline for 10 per cent minimum public shareholding in PSUs ended on August 8 and significantly, eight PSUs and PSU banks, namely, Hindustan Copper, ITDC, MMTC, National Fertilizers, Neyveli Lignite, Rashtriya Chemicals & Fertilisers, State Bank of Mysore and STC have complied,” Pranav Haldea, Director with market monitor, PRIME, said.
This puts to rest concerns raised by several analysts that PSUs would not comply with the SEBI norm citing one reason or the other, and that they would be granted more time. Interestingly, Neyveli, under pressure of the Tamil Nadu Government, used the institutional private placement route, with preferential allotment to State undertakings.
Investment Fund
According to a recent decision by the Cabinet Committee on Economic Affairs, the excess Government holding in six other listed PSUs — HMT, Fertilizers and Chemicals Travancore, ITI, Andrew Yule, Hindustan Photo Films and Scooters India — will be transferred to a special national investment fund.
The total amount diluted by the Government in PSUs to achieve minimum public shareholding norm since April 1, 2011 is Rs 2,510 crore, of which Rs 2,086 crore was through offer for sale (OFS) through stock exchanges and Rs 424 crore through IPPs.
Both these instruments were designed by SEBI for promoters to divest their holdings to meet the minimum shareholding norms.
OFS and IPP are also useful for diluting Government holdings to meet the divestment target.
In the current financial year, Rs 967 crore has been diluted by the Government in PSUs through OFS and Rs 424 crore through the IPP route.
Haldea, however, noted that despite the huge disinvestment target of Rs 54,000 crore and continuing announcements, only Rs 1,391 crore, or just 3 per cent, of the disinvestment target has been met till date.
Private sector
In the private sector, 105 companies were non-compliant, with the 75 per cent public shareholding requirement as on June 3, against whom SEBI has passed penal orders. According to Haldea, since then, 20 of these companies have complied with the requirement while 64 have diluted their stakes before the deadline. Overall, from April 1, 2011, the total amount of dilution by these companies was Rs 13,187 crore.
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