A slew of new share offers may hit the capital market over the next few months, as the government looks to make listing on the bourses mandatory for public sector firms seeking Navaratna status.
There are also plans to offload some of the government’s shares in a couple of companies that are already listed. These include metal trading company MMTC and mining giant NMDC, where the public float is less than two per cent of the total paid-up capital.
Now that the leftists have parted ways with the UPA, the government’s disinvestment programme, which has been on the backburner for the past four years, would be fast-tracked, said an investment banker, who didn’t want to be named.
In case the government decides to divest 10 per cent stake each in MMTC and NMDC, it could fetch upward of Rs 20,000 crore, he said.
“There are many other companies including some listed entities that might see further divestment by the government, particularly in the banking, oil and commodity sector,” Ketan Karani of Kotak Securities.
A senior government official, speaking on the condition of anonymity, said the Department of Disinvestment has prepared a draft proposal to encourage listing of unlisted profit-making PSUs.
The intent of such a move is to usher in greater management accountability of government-owned companies before granting navaratna status, which gives the company greater autonomy.
There are 217 public sector companies under the central government, of which 156 are profit making. Among the latter, 16 are classified as navaratnas and 54 as mini-ratnas. Currently, 44 PSUs are listed on Indian stock exchanges.
The government has already approved listing of profitable PSUs (other than Navratnas) each with a net worth of over Rs 200 crore, through an issue of minority stake. This will help raising capital without diluting the “public character” of the company.
Besides MMTC and NMDC, the government might add some more listed companies for offering fresh shares. Minister of State for Steel Jitin Prasada told Hindustan Times that his ministry could consider divestment in Rashtriya Ispat Nigam.
“The company is profitable and has considerable investment plans for future. Whatever is beneficial for the company — merger or disinvestment — will be done," Prasada said.