Unlisted PSUs may raise funds from equity market

Many unlisted public sector companies may soon tap the equity market if early indications from the government are anything to go by. The finance ministry has favoured the Deepak Parkeh Committee?s suggestion that financially sound PSUs in the infrastructure sector list on the stock market.

In a final report on infrastructure-financing, the committee has argued that PSUs play a crucial role in the sector and, therefore, be allowed to leverage their strength by tapping the market. This was one of the many suggestions made by the Parekh panel.

?The government has endorsed the committee?s idea and urged the PSUs to go for listing,? a source in the finance ministry said.

PSUs account for about 40% of India?s infrastructure-financing. The Parekh Committee raised its five-year target for spends on infrastructure to $475 billion at current prices from the earlier projection of $320 billion (at 2005-06 prices) for the next five years.

This, the committee has said, leaves a financing gap of $129 billion not accounted for in the current infrastructure-spending as a per cent of gross domestic product.

With the government backing the move, a number of unlisted PSUs operating in roads, ports, airports and railways?such as Airports Authority of India, National Highways Authority of India, Dredging Corporation of India and various arms of Indian Railways?may begin to list.

?Apart from bringing in funds, listing on the markets would improve the governance of PSUs since they will have to publish results to shareholders,? said PricewaterhouseCoopers executive director Vishwas Udgirkar.

Finance minister P Chidambaram and Prime Minister Manmohan Singh, too, have earlier asked the PSUs to unlock their potential by listing on the stock market. ?The market is the best place to judge potential. Listing of companies brings about more accountability in the system. Thus, every PSU should get listed as soon as possible,? Chidambaram had said last month.

But Udgirkar cautions that many PSUs will have to restructure themselves to go in for listing since they are in the form of authorities and not companies.