In a move towards disinvestment, trading giant MMTC today received mandatory EGM approval for spliting its share with a face value of Rs 10 into 10 scrips of Re 1 each and issuing one-to-one bonus shares.

The Extra-ordinary General Meeting (EGM) of the Rs 45,260 crore MMTC was convened here for approval of the recommendations of the company board for the stock split and bonus issue.

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While he admitted that the move is clearly towards disinvestment of some government equity in the company, it could take a while before it is ready for the follow-on market offer.
    
Sources said the government may initially offer 10 per cent of its stake for the follow-on issue. Since the present market price of Rs 28,255 a share is not seen to be realistic, given the low public float, it would be difficult to hazard the amount the government may realise through disinvestment, anlysts said.
    
Asked whether disinvestment in the company, in which government holds 99.33 per cent equity, would be possible within this fiscal, the official said it would be up to the Department of Disinvestment. "The DoD has its own priority. Let's see."
     
A Commerce Ministry official said while no timeline could be fixed, "we are trying to expertise it in the shortest possible time".
    
As per the norms of the market regulator SEBI, MMTC would need to appoint five more independent directors on its board from the present strength of three.
    
Of the five crore shares, President of India holds 4.96 crore shares, which are not traded in the market, according to the shareholding pattern posted on the website of the Bombay Stock Exchange. Though the number of shares would double because of the bonus issue, trading volume would not improve.
    
Analysts suggests that the shareholding pattern clearly shows that it is only a few shareholders who decide the price and that the exchange price does reflect its actual value.
    
"The company has minuscule shareholders and this does not give the real value of the stock, which is traded at an astronomical price on the bourses," an analyst said.

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