PSUs to comply with June 13 deadline to meet public shareholding norms

Written by Sunny Verma | New Delhi | Updated: Jun 16 2012, 06:58am hrs
State-owned companies will have to comply with the deadline of June 2013 for meeting the minimum public shareholding norms, at par with the private sector companies. The finance ministry is expected to clarify this shortly, accepting a key suggestion of the Securities and Exchange Board of India (Sebi) which sought similar discipline for state-owned companies with regard to minimum public shareholding norms.

PSU companies have been given a separate deadline of August 2013. The finance ministry, though, is unlikely to increase the ceiling of 10% minimum public float mandated for them.

Private sector companies have to meet with minimum public float of 25% by June 2013. The finance ministry has also rejected industry association CIIs suggestion to extend the deadline for meeting these norms.

Markets regulator Sebi has written to the ministry recently pitching for similar norms for PSU companies as well. A senior official said public sector companies minimum public shareholding norm is expected to be kept at 10%, as this was promised by finance minister Pranab Mukherjee at the time of Coal Indias initial public offer (IPO).

The government will have to sell stake in a total of 11 PSUs, where it holds more than 90% stake, and the value of this stake dilution is estimated at R10,980 crore, according SMC Global Securities. These companies include MMTC, HMT, National Fertilizers, Neyveli Lignite, RCF , State Bank of Mysore and STC.

In the private sector, there are about 110 companies where promoters hold over 75% stake, and the stake dilution is value at about R24,250 crore.

Economic affairs secretary R Gopalan said last week that the government did not see any strong evidence to extend this deadline.

They (PSUs) have not been given an exemption. They have been given a separate ceiling. The requirement is separate but the timeframe is almost similar June 2013 versus August 2013. And we have taken up with the government that the same discipline should also apply to them, Sebi chairman UK Sinha said in May.