Govt to throw away 15% of its NBCC stake; scrip dips 10.7%

The Centre on Wednesday approved 15 per cent disinvestment in state-owned construction firm National Buildings Construction Corporation Ltd (NBCC), hoping to garner Rs 1,706 crore from the stake sale. The decision to divest 15 per cent of government’s stake in the NBCC was taken by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi. 

Government holds 90 per cent stake in the company, which has a market capitalisation of Rs 14,274 crore. “The government hopes an estimated receipt of Rs 1,706 crore from this (disinvestment). But it is just estimation,” Law and IT Minister Ravi Shankar Prasad told reporters after the CCEA meeting.

The actual realisation amount will depend on market conditions and investor interest at the time of disinvestment. An official statement said that in order to inculcate a sense of belongingness amongst the employees of NBCC, it has also been decided to allot additional shares to the eligible and willing employees at a discount of 5 per cent to the Issue/discovered (lowest cut off) price of the Offer For Sale (OFS).

As per market regulator SEBI’s guidelines, the minimum public holding in a listed company has to be maintained at 25 per cent. National Buildings Construction Corporation Limited (NBCC) was listed on the bourses in 2012 when the government diluted 10 per cent stake to raise Rs Rs 124.97 crore. The company has split its share of Rs 10 each into five with a face value of Rs 2 each. The NBCC stock closed at Rs 229.80 a piece on BSE, down Rs 27.60 or 10.72 per cent over Tuesday.

The disinvestment of NBCC, the release said, would further broadbase NBCC’s shareholding and enhance the disinvestment receipts for making them available to the Government for utilization as per Disinvestment Policy. Government has pegged disinvestment target at Rs 56,500 crore for 2015-16. Of this, Rs 36,000 crore is to come from minority stake sale in PSU and Rs 20,500 crore from strategic sale.

Meanwhile, shares of NBCC tumbled nearly 11 per cent on the Bombay Stock Exchange (BSE) on Wednesday after the Centre approved 15 per cent disinvestment in the state-owned firm. The stock tanked 10.72 per cent to end at Rs 229.80. During the day, it plunged 12 per cent to Rs 226.40. On the National Stock Exchange (NSE), shares of the company slumped 10.91 per cent to close at Rs 229.75. In terms of volume, 20.87 lakh shares of the company were traded on BSE and over one crore shares changed hands at NSE during the day.

NBCC was listed on the bourses in 2012 when the government diluted 10 per cent stake to raise Rs 124.97 crore. In another decision, the Cabinet Committee on Economic Affairs on Wednesday also approved transfer of shares by sick PSU ITI Ltd to the Special National Investment Fund to meet the Sebi’s minimum public shareholding requirement. “ITI Limited will be allowed to transfer the requisite number of shares from President of India to SNIF as and when Capital grant is released in the form of equity infusion to ITI Limited as part of revival plan approved by Cabinet in February, 2014 to meet for SEBI’s minimum 10 per cent Public Shareholding requirement,” an official statement said.

ITI will be allowed to meet SEBI’s requirement of minimum 25 per cent public shareholding by August 2017. The PSU incurred accumulated losses to the tune of Rs 5,166 crore in financial year ended March 31, 2015.