As per the proposal, the restriction to invest up to 25% (of their net assets) in group companies or sponsors has been sought to be removed.
The Finance Ministry is likely to approach the Securities and Exchange Board of India (Sebi) for relaxation in its 21 August deadline where PSUs have to meet minimum 25 per cent public shareholding requirement norm. More than 15 PSUs including STC, MMTC, NLC, SJVN, ITDC, Hindustan Copper, Coal India, have less than 25 per cent floating shares.
Sources said most of these PSU are facing difficulty in further diluting stake in such a short period as it will make valuations less attractive if too many PSUs hit the market in a short span of time. It could end up overcrowding the market, officials said.
The Sebi stipulated this new norm in 2014 and gave a three-year time for compliance. Earlier, the PSUs were required to have only 10 per cent public shareholding. However, NHPC and NBCC have brought down their shareholding to below 75 per cent.
Sources said another reason is that some PSUs such as HMT, ITI and Scooters India are sick and it would not be easy for the government to sell minority stake in these companies. Moreover, the government shareholding in HMT and Scooters India is too high ~ at 93.69 and 93.74 per cent respectively. In ITI, the government shareholding is even higher at 94 per cent.
At present, the government shareholding is still 89.93 per cent in MMTC, 90 per cent in NLC, 89.97 per cent in SJVN and 82.95 per cent in Hindustan Copper. Union Finance Minister Arun Jaitley announced in his budget speech on 1 February said the government intends to raise Rs.72,500 crore in 2017-18 through disinvestment. This would mean that a substantial portion of disinvestment would be through the offer for sale (OFS) route and hence timing of such offers would become important.