Last day sale: Cos rush to meet public holding deadline

As a Sebi deadline ends tomorrow for listed private sector entities to achieve minimum 25% public shareholding, promoters of at least 9 firms, including Tata Comm and Essar Ports, would offer to sell shares worth a cumulative amount of over Rs 700 crore to meet the norms.

 

The other companies slated for sale of promoter shares tomorrow to meet the guidelines include BGR Energy Systems, Omaxe, Kartik Investment Trust, Lords Chloro Alkali Ltd, Marathwada Refractories, Rama Phosphates and Balashri Commercial Ltd.

 

Together, these nine companies are expected to offer to sell shares worth an estimated amount of more than Rs 700 crore tomorrow. Besides, some more companies are expected to announce their offers to meet the deadline.

 

While the Offers for Sale (OFS) of Tata Communications and BGR Energy would be conducted on the platforms of both the BSE and NSE, the remaining offers would be held on either of the two bourses.

 

As per the Sebi's minimum public holding norms, all listed entities from the private sector are required to achieve 25% or more public holding by June 3, 2013.

 

For the public sector entities, the minimum public holding of 10% is required to be achieved by August 8, 2013.

 

The norms were announced three years ago in 2010, but most of the non-compliant companies began working towards meeting these guidelines in the recent months only.

 

During the course of the last month itself, more than 60 companies offered to sell their promoter shares to meet the deadline and have sold shares worth more than Rs 10,000 crore in the process.

 

Some of the major companies that recently sold shares include Jet Airways, Essar Shipping, Tata Tele, Novartis India, Adani Enterprises, Sun TV and JSW Energy.

 

While Sebi has been firm about not extending the deadline, it has provided numerous relaxations to the companies to help them meet the norms in recent months.

 

While easy single-day auction routes like OFS and IPP (Institutional Placement Programme) were announced for the companies especially to meet the guidelines, Sebi also allowed the companies to undertake many other avenues to enable them lower the promoter holding and meet the norms. 

 

On May 30, nine companies including Jet Airways and Tata Teleservices (M) today hit markets with their respective offer for sale (OFS) issues, worth nearly Rs 900 crore to achieve 25% minimum public shareholding.

 

While six of them, including Adani Enterprises and Essar Shipping saw their OFS getting subscribed, the issues of Jet Airways and Essar Ports could not get full subscription for the shares under offer and that of Tata Teleservices was hugely under-subscribed, as per data with bourses.

 

Meanwhile, major differences came to the fore in the case of one company, Gillette India, whose proposal for achieving the minimum 25% public holding through re-classification of a senior executive from a promoter entity to a non-promoter was rejected by Sebi.

 

Gillette has challenged Sebi's decision before the Securities Appellate Tribunal, which last week granted an interim stay to the company and asked Sebi to submit its reply in the meantime.

 

The matter is posted for further hearing by SAT on June 12, meaning the company has got a relief from meeting the guidelines at least till that date.

 

Barring this, most of the companies have at least tried to sell their promoter shares to meet the guidelines, although a few like Tata Tele have failed in their attempts due to weak response to their offers.

 

It could not be immediately ascertained which are the companies that are yet to initiate the steps to meet the guidelines, but there are a very few such entities left among the companies whose shares are actively traded in the market.

 

Sebi has warned of strict action against the promoters of the companies who fail to comply with these guidelines.

 

Sebi Chairman U K Sinha, however, recently said that such actions would take into account two factors -- the intent of the companies to meet the guidelines and the interest of the minority shareholders.