The government has extended the deadline for state-run companies to meet the minimum public shareholding norms by one year to August 2018.
Through a gazette notification last week, the finance ministry amended Rule 19 (A) of the Securities Contract (Regulation) Rules that had earlier set an August 2017 deadline for listed state-run firms – excluding banks – to achieve a minimum 25% public float.
VCCircle reported late last month that the finance ministry was in talks with capital markets regulator Securities and Exchange Board of India (SEBI) to extend the 21 August deadline in order to avoid bunching up share sale offers.
The regulator had, in June 2014, mandated all listed public-sector undertakings (PSUs) to reduce within three years the government’s stake to 75%—same as the promoter holding threshold that was set for privately-held listed firms in 2010.
As on date, 13 listed PSUs have government holding more than 75%, show data from Capitaline. These include Coal India Ltd, Hindustan Copper Ltd, NLC India Ltd (formerly Neyveli Lignite Corporation), Mangalore Refinery and Petrochemicals Ltd, and National Fertilizers Ltd.
At current share prices, these companies could fetch the government roughly Rs 18,200 crore ($2.83 billion) if the government were to bring its holding to 75%. A third of this could come from Coal India alone; the government owns 78.86% of the miner and bringing the stake down to 75% could help it raise Rs 6,000 crore at current rates.
The finance ministry’s department of investment and public asset management (DIPAM) handles matters related to the central government’s investments or stake sales in PSUs.
Earlier this year, DIPAM joint secretary Manish Singh had told reporters in Mumbai that the government was on course to meeting the August deadline and that there were no discussions then about any extension.
SEBI’s public holding rule of 2014 for PSUs was aimed at widening the investor base and bringing more depth in share prices of PSUs, besides giving a boost to the government’s disinvestment programme. Previously, publicly traded PSUs were required to have at least 10% public holding.
Apart from PSUs, the government is also seeking an extension for state-run banks in which it holds more than 75% stake, the Press Trust of India reported in April.
There are seven state-run lenders where the government holding is above 75%. The government owns an 85.23% stake in United Bank of India, 82.10% in Indian Bank, 81.61% in Bank of Maharashtra, and 81.28% Central Bank of India. After capital infusion in March, the government’s stake in some more banks could go beyond 75%, the report said.