35 PSUs must dilute stake worth Rs 61,282 crore in 3 years to comply with SEBI deadline: Prime

New Delhi, June 21, 2014

As many as 35 public sector undertakings (PSUs) would need to dilute stake worth Rs 61,282 crore in the next three years to comply with the new public shareholding deadline stipulated by the Securities and Exchange Board of India (SEBI).
SEBI had said on Thursday that all PSUs would need to raise their public shareholding to at least 25 per cent in the next three years.
According to Mr Pranav Haldea, Managing Director of Prime, the country’s premier database on primary capital market, the 35 PSUs include 25 Central public sector enterprises (CPSEs), nine public sector banks (PSBs) and one state level public enterprise (SLPE).
A press release from Prime said Coal India led the list with a dilution of nearly Rs. 36,500 crore or nearly 59 per cent of the total amount. At present, the public holding stands at 10.35 per cent. In terms of amount, this would be followed by NMDC, NHPC, NLC and SAIL. 
Several large and prominent PSUs such as HPCL (public holding of 48.89 per cent), BPCL (45.07 per cent), GAIL (42.49 per cent), PGCIL (42.10 per cent), MTNL (41.77 per cent), BHEL (36.94 per cent) and NTPC have already met the revised public shareholding requirement.
Mr Haldea said it was heartening to see that the same norms are being used for both private sector and public sector enterprises. PSUs were initially asked to bring their public shareholding only to 10 per cent by August 2013 while the private sector companies had been asked to bring their shareholding up to 25 per cent by June 2013.
The total amount diluted by the Government in PSUs to achieve minimum public shareholding norm since 1st April 2011 has been Rs. 2,510 crore of which Rs. 2,086 crore was through the Offer for Sale through Stock Exchange mechanism (OFS) route and Rs. 424 crore through the Institutional Placement Programme (IPP) route. Both these instruments were designed specifically by SEBI for promoters to divest their holdings to meet with the norms.
OFS and IPP have not only been used for meeting the public shareholding norm, but are also tools for divestment of government holdings to meet the divestment target.
In the last financial year (2013-14), Rs. 968 crore has been diluted by the Government in PSUs through OFS and Rs. 358 crore through IPP (another Rs. 7,389 crore has been diluted by the Government in PSUs through Block Deals, Rs. 5,340 crore from CPSE to CPSE sale, Rs. 3,000 crore through ETF, Rs. 2,135 crore through FPO and Rs.2,131 crore through Buyback). 
Mr Haldea noted that against a disinvestment target of Rs.54,000 crore (this was however later revised to Rs.19,027 crore), Rs. 21,321 crore (or 39.48 per cent of the disinvestment target) was realised.
As far as the private sector is concerned, 104 companies were non-compliant with the 75 per cent public shareholding requirement on the 3rd June 2013 deadline, against which SEBI had passed penal orders. According to Mr Haldea, since then, 44 of these companies have complied with the requirement (31 through OFS, 5 through Bonus Issue, 3 through IPP, 2 through OFS & Bonus, 2 through Rights and 1 through OFS & IPP).
According to Prime, 67 private sector companies had already diluted their stake before the deadline of June 3 (51 through OFS, 7 through IPP, 7 through Bonus and 2 through OFS & IPP together).
Overall, from 1st April 2011 onwards, the total amount of dilution by these companies has been Rs. 8,227 crore through OFS, Rs. 4,960 crore through IPP and Rs. 9 lakhs through a Right Issue (a total of Rs. 13,187 crore).
In addition, 9 companies had unsuccessful OFS, through which the promoters diluted shares worth Rs.922 crore, the release added.

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