The Stock Holding Corporation of India Ltd (SHCIL) has shelved its plans for a public listing and stock options to its employees on account of the current sluggish market conditions. The company had earlier planned to offer 60 per cent stake to public which was subject to the board's approval.
"Subject to the board's approval, we had planned to offer about 60 per cent stake to the public and also provide ESOPs to our employees. These plans have been put on hold because of the existing market conditions," SHCIL managing director and CEO B Virupaksha Goud said.
At present, six institutions including Industrial Development Bank of India, ICICI, Life Insurance Company (LIC) and General Insurance Company (GIC) hold 16.6 per cent stake each in the company and a small percentage of equity is with the employees.
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The company has also drawn up plans to foray into distribution of insurance products and back office management of pension and provident funds of various companies. While the company is already in the process of tying up with National Thermal Power Corporation (NTPC) for offering these services, it is aggressively targeting other companies as well, Goud said. SHCIL is waiting for the final guidelines from the Insurance Regulatory and Development Authority (Irda) before it starts marketing the insurance products, he said.
The company had appointed Arthur Anderson to work-out a future strategy for the company. "The consultant has already submitted a draft report for the company which would be considered at the company's board meeting in December," he said.
He added that since competition is increasing and margins are under pressure because other firms are also offering similar services at cheaper rates, the company is exploring newer avenues to enhance its revenues. Goud said the company might even consider foraying into direct broking at a later date 'but nothing is concrete at present.'
Goud said, while retailing, at present, accounts for about 50 per cent of the company's earnings, it will account for about 70 per cent within the next few years.
The company's application for foray into banking activities is still pending with the Reserve Bank of India (RBI) because of the stipulated net worth requirements, he said. According to the RBI guidelines, a company should have a minimum net worth of Rs 200 crore if it wants to operate in banking activities. SHCIL, at present, have a net worth of about Rs 140 crore.
Goud said the derivatives market was fast picking up in the country and people were overcoming the initial fears. Goud said the company has settled about Rs 8500 crore worth of derivative transactions within the current financial year compared with Rs 656 crore during the last financial year. The derivatives trading was introduced in July last year.