Offer For Sale Strategy: Centre To Offload Stakes In Atleast Six PSUs In Defence, Railway, Fertiliser And Coal Sectors

The government is gearing up for an offer for sale (OFS) strategy to reduce stakes in several public sector undertakings by August 2024, as reported by MoneyControl.

The public sector undertakings (PSUs) include entities like the Indian Railway Finance Corporation, Indian Railway Construction International Limited (Ircon), Mazagon Dock Shipbuilders Limited (MDL), and NLC India Limited (formerly Neyveli Lignite Corporation Limited).

Stake sales in two fertiliser PSUs, National Fertilizers Limited and Rashtriya Chemicals and Fertilisers Limited, are back on the table, despite prior investor disinterest.

These OFS initiatives aim to help PSUs meet the 25 per cent minimum public shareholding requirement for listed entities.

Approximately 16 listed PSUs, excluding banks, currently fall short of this threshold, making OFS a consideration for about 6-7 of them.

Recent roadshows for MDL and Ircon have shown positive market sentiment, especially in defence and fertiliser sectors.

Stake sales in these PSUs will range from 5 to 10 per cent. The Finance Ministry has previously announced a 7 per cent stake sale in the Housing and Urban Development Corporation, to meet the minimum public shareholding requirement.

An exemption from the minimum public shareholding requirement has been granted to some PSUs until August 2024.

The government will carefully plan these OFS initiatives, considering market conditions, investor interest, and OFS size.

If PSUs cannot meet the minimum shareholding criteria, the Economic Affairs department of the Finance Ministry will request an extension of the exemption.

However, three PSUs — Scooters India Limited, State Trading Corporation of India Limited, and Hindustan Photo Films Manufacturing Company Limited — are under consideration for closure and will not undergo OFS, despite not meeting the threshold.

Similarly, Minerals and Metals Trading Corporation currently falls short of the minimum public shareholding norm and may face closure if OFS efforts fail.