With just six PSUs listed in eight years, the government plans to fix strict timelines for all profit making, large and medium sized state-owned firms to launch IPOs and list on stock exchanges. The government is very clear in its approach of getting all profit making central public sector enterprises (CPSEs) listed in a time-bound manner to open them up for public scrutiny and higher transparency, DIPAM Secretary Neeraj Gupta told PTI in an interview.
Towards this end, he said, CPSEs should set their house in order by meeting all listing requirements like audited accounts for last three years and fully constituted board with requisite number of independent directors.
Although he did not indicate the time-frame the government is looking at for listing them, another senior official said the process “should not take more than one to two years, at max, three years”.
The Union Budget 2017-18 has given a clear “focus and direction” to listing of CPSEs, said the Secretary, Department of Investment and Public Asset Management (DIPAM) which was earlier known as Department of Disinvestment)
“Profit making large and medium sized CPSEs — no point listing small CPSEs — should list. They should open up for public scrutiny and higher transparency. They should compete in the market and establish themselves for whatever worth they can command in the market,” he said.
In the process, they will have access to capital market for expansion of business activity and not rely merely on their own resources, which is government investment, he said.
“This policy clearly indicates that government has intention to complete these processes in a time bound manner,” he said, adding that the listing process has two parts –internal process and the actual transaction ie initial public offering (IPO) and listing.
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The administrative ministries, he said, will have to shoulder responsibilities in getting the companies ready for listing, which has to be done “prudently and at the right time”.
The CPSEs to be listed would be selected based on their turnover, profitability and net worth thresholds, guidelines for which will be issued shortly, he said.
“Time bound means what should be a reasonable time-frame for creating a draft red herring prospectus (DRHP)… Once the books of accounts have been audited and approved how much time should they take in filing a DRHP? 6 months?…. Some time-frame would be stipulated after discussing with everyone,” he said.
Gupta said between 2009 and now, only six CPSEs got listed. In 2012, approval was granted for listing of four CPSEs. “This has been taking so much time.”
While two PSUs got listed in 2009, three made a debut in 2010 and one in 2012. However, no state-owned companies got listed on the bourses between 2014-2016.
While the administrative ministries don’t have much of a problem, it’s the CPSEs which say that they will be exposed to higher accountability, transparency, much wider disclosure norms and big set of compliance, Gupta said. “So there is a inertia not to get into that.”
Once CPSEs are identified, the listing process will run parallelly in different CPSEs across departments. “Don’t think if the number of CPSEs is very large, the exercise is sequential. But the transaction have to be done at the appropriate done,” he said. “We will bring out guidelines and mechanism to complete different steps in a time bound manner as has been directed in Budget,” he added.