Sebi turns focus to PSUs on minimum holding norms

After cracking its whip on 105 private sector companies forfailing to meet minimum public holding norms, market regulator Securities and Exchange Board of India (Sebi) has turned its focus to about a dozen Public Sector Units (PSU). These units need to comply with these regulations in the next 60 days with sale of shares worth about Rs 3,600 crore. Sebi is also considering further actions against the non-compliant private sector companies, in addition to the orders passed against them last week.

Such an action might include monetary penalties and initiation of adjudication proceedings. A final call on this would be taken by the end of this month after responses from the companies against whom an interim order was passed on June 4.

Sebi has begun the process of sending reminders to about a dozen listed PSUs yet to attain a minimum public shareholding of 10 per cent, a senior official said.

In these reminders, the companies are being asked to initiate steps to achieve this requirement through sale of shares by the promoter, the government or state-owned entities in this case, and inform Sebi.Sebi is also informing these companies about the actions that might be taken against them for non-compliance by August 8.

Just like the private sector entities, the PSUs are also unlikely to get any respite on the deadline, a Sebi official said, adding the government had already assured it about the compliance within the prescribed timeframe.

The PSUs that need to lower their promoter holdings to 90 per cent or below to meet the guidelines include Andrew Yule & Company, Fertilizers and Chemicals Travancor, Haryana Financial Corp, Hindustan Copper, HMT, India Tourism Development Corp, ITI, Metals and Minerals Trading Corporation of India (MMTC), National Fertilisers, Neyvelli Lignite Corp, Scooters India and State Trading Corp.

The government would need to sell shares worth an estimated Rs 3,600 crore at the current valuations to meet the minimum public holding norms in these companies. Among these, the shortfall to the minimum 10 per cent public holding is more than nine per cent at MMTC and Haryana Financial Corp, and over eight per cent in HMT and Fertilisers and Chemicals Travancore.STC, ITI, ITDC, Neyveli Lignite, Andrew Yule and Hindustan Copper would need to increase their public holdings by one to five per cent. The requirement would be relatively higher at little more than five per cent for Scooters India and seven per cent in National Fertilizers.

State Bank of Mysore and Rashtriya Chemicals and Fertilisers had promoter holdings of more than 90 per cent but have managed to increase their public shareholding to above the threshold limits of 10 per cent.

One PSU entity, Hindustan Photo Films Manufacturing Corp, is currently suspended from the stock exchanges and its position could not be ascertained with regard to the minimum public holding norms, as it has not filed its shareholding pattern for a long time.