The Cabinet Committee on Economic Affairs today approved transfer of shares by sick PSU ITI Ltd to Special National Investment Fund to meet the Sebi's minimum public shareholding requirement.
"ITI Limited will be allowed to transfer the requisite number of shares from President of India to SNIF as and when Capital grant is released in the form of equity infusion to ITI Limited as part of revival plan approved by Cabinet in February, 2014 to meet for SEBI's minimum 10 per cent Public Shareholding requirement," an official statement said.
ITI will be allowed to meet SEBI's requirement of minimum 25 per cent public shareholding by August 2017. The PSU incurred accumulated losses to the tune of Rs 5,166 crore in financial year ended March 31, 2015.
The financial position of ITI is not very sound. CCEA in its meeting held in February, 2014 approved the proposal to provide financial assistance of Rs 4,156.79 crore for revival of the telecom equipment maker.
An amount of Rs 192 crore was provided to ITI during 2014-15 for meeting its capital expenditure requirements for implementing revival plan.
With this equity infusion, government's shareholding will go beyond 90 per cent.
"In order to fulfil Sebi's requirement of minimum public shareholding for listed companies, equity stake of government will have to be disinvested to bring its stake back to 90 per cent," the statement said.
Apart from this, ITI is required to comply with SEBI's requirement of minimum 25 per cent public shareholding by August 2017.
"However, ITI Limited is currently a sick company and, therefore, may not get proper valuation if it is disinvested at this stage. It is hoped that with the implementation of revival plan, the company's position will improve and the value of the shares of the company may also increase," the statement said.
Shares of ITI closed at Rs 34.15 a piece, up by 18.78 per cent compared to previous close, at BSE today.
