Exclusive: Govt likely to seek extension of exemption from minimum public shareholding for 10 PSUs

The Economic Affairs department of the Finance Ministry will seek an extension of the exemption for them before August

The government is likely to seek the extension of the exemption from the minimum public shareholding (MPS) norm for about 10 Central Public Sector Enterprises (CPSEs) beyond August 2024.

Currently, some 16 listed PSUs, excluding banks, are not meeting the MPS requirement of 25 percent. A blanket exemption was given to some PSUs from MPS till August 2024.

PSUs like ITDC, MMTC, and KIOCL may fail to meet the Securities and Exchange Board of India (SEBI) norm, a senior government official said.

“The public sector undertakings include India Tourism Development Corporation (ITDC), Andrew Yule & Co Ltd, Minerals and Metals Trading Corporation (MMTC), Madras Fertilisers, State Trading Corporation of India Limited (STC), Scooters India Limited (SIL), Hindustan Photo Films Manufacturing Company Limited (HPF), Fertilisers and Chemicals Travancore Ltd (FACT), ITI Limited and KIOCL. They are unlikely to meet the MPS criteria. The Economic Affairs department of the Finance Ministry will seek an extension of the exemption for them before August,” the official told Moneycontrol.

“In the case of KIOCL, with a 99.03 percent government holding, there is no price discovery. Public holding is only a handful. KIOCL has forest and mine clearance issues in Karnataka. The Follow-On-Public Offer (FPO) process was on for KIOCL but was held due to the clearance issue. So, MPS extension is likely for it,” the official said.

The government is hoping to go for stake sales via the Offer For Sale (OFS) route for the other PSUs before August 2024 to meet the MPS requirement.

The PSUs – India Tourism Development Corporation (ITDC), Andrew Yule & Co. Ltd. – which do not meet the MPS norm are currently under strategic disinvestment and thus their stakes cannot be offloaded via the OFS route and MPS extension will have to be sought, he said. The government has 89.25 percent stake in Andrew Yule and 87 percent in ITDC.

MMTC, with an 89.93 percent government stake, also does not meet the MPS norm currently. If the efforts to come out with an OFS in MMTC fail, it will be recommended for closure, and an MPS extension is likely, the official said.

SIL and STC are already under consideration for closure. So, no OFS will be brought in and exemption from the MPS norm will be sought.  HPF is in the NCLT for restructuring. The government holds 93.87 percent in SIL and 90 percent in STC.

“Madras Fertilisers is loss-making. So, no investors are there. MPS extension is likely in FACT as well, though, of late, its books have shown profits by selling some land. ITI Ltd has a 90.28 percent government stake. So, achieving MPS is not possible through minority stake sale,” he said.