Follow-on Offers for Divestment Mooted
Finance ministry officials have proposed divestment through follow-on offers and open offer for sale to increase the market float of state-run companies. Some of the big companies where government has room to dilute more stake include Coal India, Sail, MMTC, NMDC, NHPC, Neyveli Lignite and Nalco. According to a senior finance ministry official, the government can accept the recommendations made by market regulator Stock Exchange Board of India (Sebi) to bring public float in state-run firms at par with private firms.
At present, private companies have to maintain a minimum 25% public float while the limit for PSUs is 10%.
“These points have been included in the presentation made to the finance minister,” said the above quoted finance ministry official, adding that government will maintain majority stake of 51% in all its enterprises.
The NDA government, which pushed aggressive privatisation in its last stint, has not taken a clear stand on the issue. Going by the Gujarat experi- ence, the Modi government may foucs on strengthening state-run companies. As per a research note by Standard Chartered, a buoyant equity market increases the chances of higher disinvestment proceeds in FY15. “The BSE PSU index has increased by 56% since the end of February 2014,” it noted in its report. “This will also broad base the market. As of now, the market
Going by the Gujarat experience, the Modi government may foucs on strengthening state-run companies
is not deep enough and most action is limited to a handpick of scrips,” the above quoted official added. In 2012, Sebi had announced mandatory 25% public holding for both public as well as private companies but later it altered the minimum public shareholding norms for listed public sector entities and they were to maintain at least 10% public holding by August 2013. “Unlike in the previous government, the administrative ministries will not be sabotaging the disinvestment agenda and it can be pursued in earnest,” said the above quoted official.