FinMin plans to transfer shares of some PSUs to SNIF to meet Sebi's public float norm
New Delhi: The Finance Ministry is planning to transfer government shares of 10 PSUs, including MMTC, ITDC, MRPL, Hindustan Copper, to a fund to meet Sebi's minimum public shareholding norms.
As per the norms, PSUs were mandated to achieve the minimum 25 per cent public shareholding by August 21, 2017, which was later extended by a year. With the deadline looming, the ministry is contemplating to shift government shareholding in the 10 PSUs to 'Special National Investment Fund' (SNIF) to meet the market watchdog's norms as it may not be possible to sell stake in these companies in the current market conditions. The proposal, being prepared by the finance ministry, would be placed before the Union Cabinet for approval soon, sources said. The 10 PSUs in which government shareholding has to be brought down to 75 per cent also include Coal India, NLC (formerly Neyveli Lignite) , SJVN, State Trading Corporation (STC), Kudremukh Iron Ore Company (KIOCL) and Madras Fertilisers.
As per the note prepared by the ministry, Alternate Mechanism (AM) for disinvestment would be empowered to decide on shares of which PSUs could be transferred to SNIF. The AM will help the ministry in taking quick decisions in view of the changing market conditions.
Currently, the ministry is conducting roadshows for selling stake in Coal India and NLC. Government holds 78.32 per cent stake in CIL and 84.04 per cent in NLC. In case the ministry is unable to offload shares in these two companies to 75 per cent, the AM would decide on transferring their shareholding to SNIF, sources said.
In August last, the Cabinet had approved setting up of an AM comprising finance minister, road transport minister and the concerned administrative minister, to decide on modalities of stake sale in PSUs.
The government had in 2013 approved setting up of SNIF with the specific objective of meeting the minimum public shareholding of 10 per cent as was then mandated by the Securities and Exchange Board of India (Sebi).
The Centre had then transferred 10 per cent of its stake in six sick CPSEs - FACT, Hindustan Photo Films Manufacturing, HMT, Scooters India, Andrew Yule and Company, and ITI-- to SNIF .
Now, with the August 21 deadline approaching fast, the government is considering to transfer more shares to meet the 25 per cent public float norm.
SNIF was formed to transfer the number of shares that was required to make six sick companies compliant with the minimum public shareholding norm without any consideration.