The finance ministry is working on a road map to divest stake in seven big state-run companies, which include Coal India, SailBSE -3.29 %, MMTCBSE 0.42 %, NMDCBSE -1.26 %, NHPCBSE -0.19 % and Nalco.
The government holds 80% or more stakes in these companies. "We will draw a road map and accordingly start consultations with the respective administrative ministries," said a senior finance ministry official.
The Securities & Exchange Board of India (Sebi) has proposed to bring public float in state-run firms at 75%, equal to that of private companies. The finance ministry is of the view that Sebi will give at least two to three years to meet the norms and it can accordingly work out a road map so that there is no glut of PSU stocks in the market.
"If the Sebi norms are accepted, we will have to work out a mechanism to help them meet the new guidelines, keeping in mind both the timing of the issues and the appetite of the market," said the official quoted earlier, adding that focus is on increasing participation from retail investors.
The government, which is expected to retain the disinvestment target through stake sale in PSUs at Rs 36,000 crore, will kickstart with bigger issues such as Coal IndiaBSE -2.17 % and Sail. A 10% stake sale in Coal India alone will fetch the government around Rs 22,000 crore at current market prices. "We are hopeful of Coal India issue before the end of this year," said the finance ministry official.
Experts say the market has the appetite for stocks of state-run companies. "There will be a lot of interest from institutional investors but for retail participation, government will have to give incentives in the form of discounts and other measures," said Kishor Ostwal, chairman and managing director, CNIResearch.
The government will also proceed with its residual stake sale in companies such as Hindustan Zinc and Balco. It has already decided to appoint valuers for its 29.54% stake in Hindustan Zinc, signalling that it is not averse to exiting assets.
In the case of sick PSU firms, the government will offload the additional stake to the special investment fund that was created for meeting the minimum public shareholding of 10% in six sick central public sector enterprises.