The government holds over 90 per cent (between 90-99.3 per cent) stake in a dozen public sector companies listed on the stock exchanges. If the government reduces its stake to the 90 per cent-level, it can raise as much as Rs 30,000 crore from these listed PSUs at current market prices. The government has pared its holding below 90 per cent in the remaining 23 listed PSUs (which include ONGC, Indian Oil, BPCL, HPCL and SAIL).

In NMDC, as the government holds 98.38 per cent stake, its equity dilution to the 90 per cent-level will fetch the exchequer over Rs 10,200 crore. Similarly, in MMTC, the government holding is 99.33 per cent. This means it can raise over Rs 14,000 crore by disinvesting another 9.33 per cent.

As per the listing regulations of the Securities and Exchange Board of India, all listed companies must have a minimum floating stock of 10 per cent of total equity. As of now, only government companies are exempt from this regulation.

Sebi and the government are separately holding discussions on a proposal to increase the percentage of public holding in listed trade companies to 25. “There is a discussion going on between the government of India and Sebi. The government will make a notification in this regard,” Sebi chairman C B Bhave told reporters on the sidelines of a function in Chennai.

It is likely that once new rules on minimum public holding are in place, these will be extended to public sector undertakings as well. Analysts also argue that the proposed disinvestment in these companies could also be justified as a requirement under Sebi regulations and to create a level playing field. Asked about reports that the new measure would be in place by April 2010, Bhave said, “I can’t speculate on that....”

... contd.