Smaller PSUs told to shed 10% stake

Smaller PSUs told to shed 10% stake

Move aimed at raising maximum resources

Smaller PSUs told to shed 10% stake

The Department of Disinvestment (DoD) has asked small PSUs, which intend to hit capital markets, to come with initial public offering (IPO) of more than 10 per cent of their paid-up capital.

In a communication to the Department of Heavy Industries, the Department of Disinvestment has said that all profitable companies which come under the ministry should consider offers of 15-20 per cent of their paid-up equity.

“To make the IPO cost effective we have asked the department to consider share sale to raise maximum resources,” a top government official said.

The Department of Heavy Industries has under its administrative control 22 companies and 10 subsidiaries. Apart from power equipment maker BHEL, the rest are all of small size companies.

The Centre has already initiated the process of 5 per cent stake sale in BHEL. Besides, the government has decided to divest its entire 95 per cent in Scooters India Ltd (SIL), which primarily manufactures three-wheelers, with an aim to revive the company that has been incurring losses since 2002-03.

Also Depart of Disinvestment has also initiated the process of outright sale of West Bengal-based Tyre Corporation of India, engaged in manufacturing and marketing of automotive tyres.

As per the disinvestment policy, all unlisted central public sector enterprises (CPSEs) with no accumulated losses and having earned net profit in three preceding consecutive years can get itself listed on the stock exchanges. The government has fixed a target of Rs 30,000 crore from disinvestment of CPSEs in the current fiscal. In the last fiscal, against a target of Rs 40,000 crore, owing to volatile stock market conditions,  government could mop up only Rs 14,000 crore.