142 of 169 unlisted public sector undertakings are profitable, but only 47 are trading on bourses
NEW DELHI: With market listing of PSUs coming to a standstill in the last two years, the government has finally decided to crack the whip.
It is soon coming out with guidelines that would make it mandatory for unlisted profit-making PSUs to complete the process of listing at stock exchanges within a stipulated time frame.
Central public sector enterprises (CPSEs), state-owned banks and other companies, where the government indirectly holds a majority share, together account for nearly 12 per cent of BSE’s total market capitalisation as on January 31.
Data show that there are a total of 169 unlisted PSUs, of which 142 are profit making. But only 47 have so far been listed.
Now the effort will be to bring the most profitable among the unlisted entities first for listing. This could include all the five general insurance companies where listing has already been cleared by the cabinet.
It would include Airport Authority of India (AAI), Hindustan Aeronautics (HAL), few Railway sector companies, subsidiaries of Coal India and country’s sole overseas focused oil and gas entity, ONGC Videsh (OVL).
Disinvestment secretary Neeraj Kumar Gupta confirmed to Financial Chronicle that his ministry is preparing norms to ensure listing of profit-making PSUs in a time-bound manner. Small state-owned firms would be exempted from compliance with envisaged regulations.
Though the government is going all out to see that the listing process goes through unhindered, its track record has been far from smooth.
The UPA government had in 2009 decided that all unlisted CPSEs, which have made a profit in the past 3 years and with a positive net worth, should get listed on bourses in compliance with guidelines laid down by the Securities and Exchange Board of India (Sebi).
This was taken up again in 2013 and later picked up by the Modi government in the following year. In 2014, it was stipulated that all listed PSUs raise their minimum public shareholding to 25 per cent by August 21, 2017.
But data shows that just six PSUs have got listed in the past 8 years.
The Union budget 2017-18 had stated the government’s plan to bring guidelines for mandatory listing of profitable PSUs. “Profit making large and medium sized CPSEs – no point listing small ones – should list. They should open up for public scrutiny and higher transparency. They should compete in the market and establish themselves for whatever worth they can command in the market,” Gupta told PTI on Wednesday.
In the process, they will have access to capital market for expansion of business activity and not rely merely on their own resources, which is a government investment, he said. “This policy indicates that government has the intention to complete these processes in a time bound manner,” he said, adding the listing process has two parts – internal process and the actual transaction – that is, initial public offering (IPO) and listing.
While the administrative ministries do not have much of a problem, it’s the CPSEs, which say that they will be exposed to higher accountability, transparency, much wider disclosure norms and big set of compliance, he said. “So there is an inertia not to get into that,” he added.
The disinvestment secretary said that administrative ministries would have to shoulder responsibilities in getting the companies ready for listing, which has to be done “prudently and at the right time.”
Although he did not indicate the timeframe the government is looking at for listing them, another senior official said the process “should not take more than one to two years, at max, three years.”