The finance ministry is mulling floating a cabinet note for closing the Special National Investment Fund (SNIF) created to meet the minimum public shareholding requirement of 25 percent in some central public sector enterprises (CPSEs).
Under Securities and Exchange Board of India (Sebi) norms, for a company to remain listed, it needs to have a minimum public shareholding of 25 percent. In these companies, the government holds more than 75 percent and the SNIF was created to divert a part of the excess government stake.
Once the special fund is closed, the equity of these CPSEs parked in it can be returned, a senior government official told Moneycontrol on December 18.
“Since there were no investors for some CPSEs, a certain percentage of their equity was kept in SNIF. For example, in the case of ITI Ltd, its 7 percent stake is in SNIF. Since the fund was set up by a cabinet decision, it has to be dismantled the same way, and its shares should be returned to the President of India,” the official said.
The CPSEs include Andrew Yule & Company Ltd, Fertilizers & Chemicals (Travancore) Ltd, HMT Ltd, ITI Ltd and Scooters India Ltd.
The Cabinet Committee on Economic Affairs (CCEA) had approved the creation of the SNIF in August 2013.
Fund managers were expected to be appointed for SNIF, which was tasked with selling this equity, but nothing has moved forward for so many years, he said.
In ITI Ltd, the government has a 90.28 percent stake and thus achieving the minimum public shareholding norm via the minority stake sale route is not possible. “The government will have to offload 15-20 percent to achieve the minimum public shareholding,” he said.
Andrew Yule & Company Ltd is under consideration for strategic disinvestment while Scooters India Ltd has been approved for closure. HMT Ltd’s case is before the National Company Law Tribunal (NCLT) for restructuring.
The finance ministry will look at selling a minority stake in FACT in the next fiscal. “The CPSE is loss-making, but, of late, it has shown some profits by selling some land. Its deadline for achieving minimum public shareholding ends in August 2024, so the finance ministry will seek extension from Sebi,” he said.
Hindustan Photo Films Manufacturing Co Ltd, once an iconic name as a Tamil Nadu-based CPSE, has been put on the auction block for closure.
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