Though MMTC is currently listed, its public float is merely 0.67%. "There are some issues that need to be sorted out. Disinvestment in MMTC is likely to be completed before the end of 2009-10," said a board member of the company, who was part of the recent decision to go for a follow-on offer.
Earlier, the disinvestment department had asked the company's administrative ministry, the commerce ministry, to examine if MMTC and State Trading Corporation could go in for further stake sale and if Export Credit Guarantee Corporation (ECGC) could go for an IPO.
Government sources told FE that while the commerce ministry is confident of closing disinvestment in MMTC in the current fiscal, STCs stake sale will take some time. "The board is yet to take a call on STCs disinvestment. This will be done after addressing certain issues," the source added. The government currently owns 91.02% of STC.
However, ECGC, the worlds fifth-largest export insurance in terms of national coverage, is unlikely to see an IPO in the recent future. The commerce ministry feels that the corporation is meant for export promotion and not for earning profits from its operations. "The commerce ministry has told the disinvestment ministry that the objective of ECGC is not to earn profit but to promote exports. Across the globe, state-owned credit guarantee corporations are engaged in export promotion and their aim is not for making profits. Hence, the commerce ministry is not open for a stake sale in ECGC. If there is a decision to go for disinvestment in ECGC, its charter will have to be modified," said a government official in the know.
Taking a PSU to the market takes about three to six months after it is approved by the board. The case is then referred to the disinvestment department, after which an advisor is appointed, who lays down the road map for the dilution of government stake. After this, the department of commerce and disinvestment will discuss how the process will be carried out. Once this is done, the commerce department will put the proposal before the Union Cabinet for approval. After this, valuation of the company is carried out so that the investor has all the relevant information. In addition, approval from market regulator Sebi is also needed.
MMTC and STC are engaged in trading business. While MMTC is listed on BSE, STC is listed on BSE and NSE. With primary focus on bulk operations, MMTCs trading operations are centered around seven commodity groups -- minerals, precious metals, coal and hydrocarbons, fertilisers and chemicals, agriculture items and metals. The PSU accounts for 20% of the value of refined base non-ferrous metals imported into India. It also imports about 23% of Indias gold.