PSUs wait out choppy mkts before floats

A host of public sector firms, wary of riding into rough weather in the prevalent turbulent market conditions, are shying away from launching public offers even as the finance ministry is trying to finalise a disinvestment game plan 2012-13.

"We want to encourage state-run firms to list in the market as a means to improve corporate governance. But not many firms have shown interest due to the poor market conditions," a finance ministry official said.

The issue is understood to have been raised at an inter-ministerial consultation organised by the Department of Disinvestment (DoD) on Monday to discuss listing of subsidiaries of profitable public sector undertakings (PSUs).

The 30-share sensitive Bombay Stock Exchange, Sensex, has fallen by 11.4 per cent in the last one year leading to many disinvestment issues being shelved in 2011-12, including those of Steel Authority of India Ltd (SAIL), MMTC Ltd and Hindustan Copper Ltd.

Now, two heavyweights, SAIL and Bharat Heavy Electricals Ltd (BHEL), have also bowed out from plans to launch follow-on public offers (FPO). BHEL's planned FPO involved 5 per cent disinvestment of government equity.

While the Sensex may be down by only 11 per cent, shares of SAIL are trading 45 per cent below their year-ago share prices. Similarly BHEL has fallen by around 42 per cent in the same period and MMTC and Hindustan Copper have lost 18 per cent and 11 per cent respectively. So, launching issues at this time is likely to fetch a lower realisation for the government or the company in case of fresh equity on offer.

"SAIL is not happy with the pricing in the market and now only government stake sale will happen," disinvestment secretary Mohammad Haleem Khan said. The government will only divest 5 per cent of its stake in the steel miner, as against the original plan to include 5 per cent issue of fresh equity by the company.

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