Fund on anvil to help loss-making PSUs comply with Sebi norms

The Finance Ministry has circulated a draft Cabinet note for creation of a special fund which will buy shares of listed loss-making PSUs to make them compliant with the 10% minimum public holding norm of market regulator Sebi.

     
At present, there are seven loss-making public sector undertakings -- Scooters India, HMT, Andrew Yule, State Trading Corporation, ITI Ltd, Fertilisers and Chemicals Travancore and Hindustan Photofilms -- in which the government has to bring down its stake to 90%.

     
"The draft Cabinet note has been circulated for setting of a special fund in which the shares of loss making PSUs will be transferred," an official source said.

     
The fund would be managed by an asset management company as the fund manager, the source said, adding that market regulator Sebi has given its consent for the proposed fund which will act like a institutional buyer to purchase stake in such PSUs.

     
With barely 11 days left to meet the minimum 10% public holding norm of market regulator Sebi, disinvestment department is gearing up to get Cabinet approval for the proposed fund as soon as possible.

   
The government has budgeted Rs 40,000 crore by way of PSU stake sale but has managed to raise only over Rs 800 crore so far this fiscal.

     
Besides, it is planning to sell stake in Neyveli Lignite Corporation to lower its holding to 90%.

     
"Right now our priority is to meet the minimum public holding norm in those listed PSUs where Centre holds more than 90%," the official said.