The last couple of months saw state-owned companies like MMTC, Hindustan Copper, National Fertiliser, Neyveli Lignite, ITDC and STC all launch their share offerings to lower their promoter holding to comply with the minimum public shareholding (MPS) norms.
Further, the government managed to garner around R1,330 crore from these stake sales. This is, however, much lower than the governments aim of raising R40,000 crore through divestments in the current financial year. MMTC, which saw the government selling shares at 70% discount to the then prevailing market price, accounted for the largest chunk, with the exchequer collecting a total of R572 crore by divesting 9.33% stake.
Interestingly, Sebi also played its part in helping PSUs to comply with the norms. For instance, in the case of Neyveli Lignite, Sebi accepted the proposal of the Tamil Nadu government, wherein the entire lot of 5.97 crore shares was sold to entities owned by the
state government. Similarly, some of the loss-making PSUs, including HMT, Fertilizers Chemicals Travancore, Hindustan Photofilms, ITI, Andrew Yule Company and Scooters India, were allowed to transfer shares in excess of 90% to a specially-created fund by the government, only to be sold at a later date.
Meanwhile, Sebi chairman U K Sinha had clearly stated that the regulator would act against PSUs as well if the MPS guidelines are not complied with before the deadline. Speaking to FE on Thursday, Sinha confirmed that all PSUs had complied with the norms.
The capital market regulator was quick to act against non-compliant listed private entities by restraining the promoters and even directors from taking up new positions as directors in any other listed entity. The restraining orders were in place till such companies bring down their promoter holding to 75%.
While June 3 was the deadline for all listed private entities to bring down the promoter holding to 75%, a total of 108 companies failed to do so. The list comprised of more than 70 actively-traded companies with the rest being suspended entities. Even now, over a 100 companies remain non-compliant. While Sebi chief UK Sinha remains hopeful that companies will step the pace of compliance, he stressed that stringent action would be take against those companies that are found to be willful defaultors. Penalties will be inversely proportional to the amount of effort made by the companies to comply with the regulations, Sinha told FE ,adding that process of passing final orders has been initiated.