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The department of disinvestment has floated a draft cabinet note for selling stake in State Trading Corp Ltd (STC) through the offer for sale (OFS) route to meet the minimum public shareholding norms of Sebi.
The government was originally planning to divest its 1.02% stake in the trading company by way of selling it to MMTC Ltd.
"The DoD has decided to take the OFS route, as SEBI has said MMTC buying shares in STC would not make the latter compliant with the minimum public shareholding norm," official sources said.
The government currently holds 91.02% in STC and needs to lower its holding to 90% by August to comply with market regulator Sebi's minimum public shareholding norm of 10%.
The DoD had originally planned to sell the 1.02% stake to trading company MMTC or to other financial institutions to avoid going through the long process of OFS as the number of shares on block is very less.
"SEBI has not approved stake buy by MMTC as it will not make the company compliant to public holding norm," the official said, adding the DoD would now look at going for the OFS route in July.
"We have moved the draft Cabinet note, and hopefully may get the Cabinet approval in July," the official added.
Shares of STC closed at Rs 162.85, down 1.03% on BSE.
