MC exclusive: Centre plans OFS in defence, railway, fertiliser, coal PSUs to meet minimum public shareholding

The stake sales in these PSUs will be approximately 5-10 percent each.

The government is planning an offer for sale (OFS) pipeline to offload stakes in at least six public sector undertakings (PSUs), including Indian Railway Finance Corporation (IRFC), Indian Railway Construction International Limited (Ircon International), Mazagon Dock Shipbuilders Limited (MDL) and NLC India Limited (formerly Neyveli Lignite Corporation Limited) till August 2024, a senior government official said.

Moneycontrol learns that stake sales in two fertiliser PSUs, National Fertilizers Limited (NFL) and Rashtriya Chemicals and Fertilizers Limited (RCF), are also back on the table, despite being on the backburner due to lack of investor interest.

These stake sales, via the OFS route, will help these PSUs meet the minimum public shareholding requirement of 25 percent for listed entities.

“Some 16 listed PSUs are there, excluding banks, which do not meet the minimum public shareholding requirement of having a 25 percent stake with the public. So, the OFS route can be taken in at least 6-7 PSUs,” the official told Moneycontrol. “The MDL and Ircon roadshows have already been held recently. The PSU graph for defence and fertiliser is up, so it's a good time to plan an OFS in these. Among the fertiliser PSUs, the OFS for NFL and RCF can happen anytime.”

The stake sales in these PSUs will be of approximately 5-10 percent each, he added.

Earlier, the Finance Ministry had announced a 7 percent stake sale in Housing & Urban Development Corporation (HUDCO) via an OFS after which it will meet the minimum public shareholding requirement.

A blanket exemption was given for some of these PSUs from the minimum public shareholding (MPS) requirement till August 2024.

“The OFS in the 6-7 PSUs will be planned keeping market conditions, investor interest, and the size of the OFS under consideration,” the official said.

If any PSUs are not able to meet the MPS criteria, the Economic Affairs department of the Finance Ministry will seek an extension of the exemption for them before August, he said.

Three PSUs—Scooters India Limited (SIL), State Trading Corporation of India Limited (STC), Hindustan Photo Films Manufacturing Company Limited (HPF)—are already under consideration for closure so they will have no OFS despite not meeting the MPS norm.

Minerals and Metals Trading Corporation (MMTC) also does not meet the MPS norm currently. If efforts to come out with an OFS in the PSU fail, it is likely to face closure, he added.

India Tourism Development Corporation (ITDC) and Andrew Yule & Co. Ltd., which do not meet the MPS norm, are currently under strategic disinvestment and thus their stake cannot be offloaded via the OFS route.
SJVN and Rail Vikas Nigam Limited (RVNL) achieved the minimum public shareholding of 25 percent recently.