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The Government will kick off its disinvestment programme for 2013-14 on Thursday with the sale of MMTC’s shares.
An Empowered Group of Ministers approved the sell-off on Wednesday. “We have decided to sell 9.33 per cent stake in MMTC. The entire sale will take place in one tranche,” Disinvestment Secretary Ravi Mathur, said. The floor price for the offer-for-sale through the stock exchanges will be Rs 60/share.
This floor price is almost one-fourth of the Wednesday’s market closing price. MMTC’s share closed at Rs 211.45 with a gain of 2.92 per cent over Tuesday’s closing. The Government is now selling 9.33 crore shares and at this floor price, it is estimated to get nearly Rs 560 crore. The face value of a share is Re 1.
Rs 70.62-cr loss
In fiscal 2012-13, MMTC reported a loss of Rs 70.62 crore due to the 57 per cent decline in total revenues compared with the previous fiscal. The company had reported a profit of Rs 70.72 crore in 2011-12.
Thursday’s sell-off will bring down the Government’s equity in the company to 90 per cent. This will help the company to meet the minimum public shareholding norms, as the Securities and Exchange Board of India norms prescribe a minimum 10 per cent public shareholding. The regulator has set a deadline of August for the listed public sector enterprises to meet the norms.
OFS is a new mechanism for selling shares and is used by listed companies only. Under this method, the floor price or base price is set by the issuer, after which various investors bid. The highest bidder gets the maximum number of shares. This mechanism is different from the traditional follow-on-offer method. Also, it takes little time to complete and does not entail too many formalities, such as road shows or filling up forms.
Although it is said that all categories of investors — institutional, high net worth, individuals, retail and employees — can participate in the offer, there will neither be any quota nor any discount for any category of investors.
The Government aims to mop up Rs 54,000 crore through disinvestment this year. This includes Rs 40,000 crore through offloading stakes in various Central Public Sector Enterprises, while the remaining Rs 14,000 crore is to be raised through selling residual stakes in private companies.
shishir.sinha@thehindu.co.in
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