More than 150 listed companies that are supposed to adhere to the 'minimum public shareholding (MPS) guidelines', mandating 10-25 per cent public shareholding, are not in a hurry to comply with the rules.
The finance ministry came out with the MPS guidelines on June 4, 2010 and, further, on August 9, 2010, it revised these guidelines. According to these guidelines, the public sector undertakings (PSUs) are expected to maintain an MPS of 10 per cent, while the private sector has to maintain 25 per cent public holding within three years - that is by June 3, 2013.
To comply with the norms 162 companies, including 15 PSUs, have to come up with public offers to dilute promoter's stake to 75 per cent. However, if the companies choose not to reduce the promoters' stakes, then they may have to delist the companies. Only two public sector units (PSUs) out of 15 and six private companies out of 147 have either complied with the guidelines or are in the process of complying with them.
Public sector firm Engineers India Ltd (EIL) has already complied with the norms by bringing the government holding down to 80.4 per cent in July through a follow-on public offering (FPO), while Hindustan Copper Ltd is in the process of coming out with an FPO.
Among their private sector peers, Sulzer has been delisted, while Oracle Financial has announced its intent to offload promoters' stake to take public holding to 25 per cent, SMC Global Securities said in a study on completion of six months of the guidelines coming into being.
Astrazeneca Pharma, BOC India, Kennametal India, and Atlas Copco India have announced their intention to delist in order to comply with the guidelines. That leaves 154 companies that have not yet announced any plans to adhere to the norms.
"The companies are not in a hurry to comply with the guidelines, probably because they have time up to June 2013," said Jagannadham Thunuguntla, strategist and head of research, SMC Global.
"To ensure wider participation of the investors and to ensure well diversified shareholding pattern, the Indian corporate world may need to take active interest in compliance with these guidelines of minimum public shareholding norms," Thunuguntla added.
Of the remaining 154 companies that have to adhere to these guidelines, 13 are PSUs and 141 are private companies. In MMTC (erstwhile Minerals and Metals Trading Corp), Haryana Finance Corp, FACT and HMT, nearly 99 per cent of the shareholding is held by the government. The Centre also holds over 95 per cent shares in National Fertilizers Ltd and Scooters India Ltd.
In the private sector, companies that have almost negligible public shareholding include, Maharashtra Electrosmelt (promoter holding of 99.12 per cent), Spice Communication (98.9 per cent), Citurgia Biochem (98.66 per cent), REIL Electricals (98.19 per cent) and DGP Securities (96.26 per cent), among others. There are 23 companies which have their promoters' holding marginally above the maximum limit specified under the guidelines.
Promoters are holding between 75 to 77 per cent stakes in firms such as IL&FS Transportation (with 75.09 per cent of promoter holding), Vishnu Chemicals (75.21 per cent), Gandhimati Appliances (75.3 per cent) and Amrapali Industries (75.44 per cent).
Courtesy: Mail Today
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