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CCEA nod for listing of seven CPSEs in bourses

K R Srivats New Delhi | Updated on December 28, 2018 Published on December 28, 2018

Ravishankar Prasad, Union IT and Law Minister   -  File photo

These entities to be listed via IPO or FPO route, says Law and IT Minister Ravi Shankar Prasad

The Centre’s disinvestment programme got a boost with the Cabinet Committee on Economic Affairs (CCEA) giving its nod for share sale in seven Central Public Sector Entities (CPSEs).

Describing the decision as a reform oriented move, Ravi Shankar Prasad, Law and Justice and Electronics and IT Minister told reporters that share sale will happen through IPO route in six CPSEs and one through follow-on-public-offer (IPO).

The seven entities are Telecommunication Consultants (India) Ltd (IPO); RailTel Corporation of India Ltd (IPO); National Seed

Corporation of India Ltd (IPO); Tehri Hydro Development Corporation (IPO); Water & Power Consultancy Services (IPO); FCI Aravali Gypsum (IPO) and Kudremukh Iron Ore Company Ltd (KIOCL) (through FPO)

Prasad also said that listing of the CPSEs on the exchange would unlock their value and encourage investor participation in the CPSEs.

ELIGIBILITY CRITERIA

The CCEA has given its approval to expand the scope of eligibility criteria for listing of CPSEs. With this decision, CPSEs with a positive net worth and net profit in any of the immediately three preceding financial years would be eligible for listing in the stock exchange.

In another significant decision, the Alternative Mechanism comprising of the Finance Minister, Minister of Road Transport & Shipping and the Minister of concerned administrative ministry has been empowered to decide on extent, mode of disinvestment, pricing, time etc of listed CPSEs (including CPSEs to be listed in future).

Asked if the share sale for these seven entities will get done in the current fiscal itself, Prasad declined to be drawn into a timeline.

“It is a big reform. The Cabinet has given in-principal approval. The concerned administrative ministry will now speed up its implementation”, he said.

STORY SO FAR

The latest CCEA decision comes at a time when the Government is taking extra efforts to achieve the disinvestment target of Rs 80,000 crore. Till date, the Centre has mopped up less than half the target for the current fiscal.

“The government has so far raised around Rs 34,000 cr through disinvestment. The move to have 7 unlisted companies is an effort to reach the target of Rs 80000 cr for the year. This is a positive step though it is uncertain if there will be a lot of retail interest in these companies as they are not the large ones”, Madan Sabnavis, Chief Economist, CARE Ratings told BusinessLine.

He felt that this will be a test for all future attempts at listing such companies. The disinvestment target is likely to be met as there have been several Public Sector Units (PSUs) investing in others as well as buybacks which is a way of using surpluses and reserves of PSUs to finance such purchases, Sabnavis said.

Published on December 28, 2018
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