Cabinet clears ITI follow on offer; to help meet Sebi's public shareholding norm

The Cabinet today cleared selling of 18 crore equity shares of ITI Ltd through a follow on public offer (FPO), which will help the telecom PSU meet the minimum 25 per cent public shareholding norm.

Market regulator Securities and Exchange Board of India (SEBI) had mandated a minimum 25 per cent public float for all listed companies. The deadline for PSUs to achieve the minimum public float will end in August.

An official statement issued after the meeting of the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, said the CCEA has given its approval for offering 18 crore fresh equity shares to the general public through a prospectus based Further Public Offer in the domestic market.

The FPO would help ITI Ltd raise working capital for new projects, reduce its debt obligations and meet Sebi's requirement of minimum 25 per cent public shareholding, it added.

The government currently holds 92.59 per cent stake in ITI.

"The Further Public offer will provide the much needed working capital to the company and help it to timely execute the orders that it has in hand and improve its margins. This, in turn, will help in protecting the current employment and generating more job opportunities in the company particularly in the field of new telecom technologies," the statement added.

ITI would reserve 5 per cent of the offer, over and above the fresh shares being offered in the FPO, for allotment to employees of the company.

The company would offer a discount of up to 5 per cent to retail investors as well as employees and will appoint advisors and merchant bankers for the FPO.

ITI is a supplier for the defence communication and networking needs and a major supplier of encryption products to the Indian Army. The major customers are BSNL, MTNL, Defence, Paramilitary forces and State Governments.

ITI has six manufacturing units at Bengaluru (Karnataka), Raebareli, Naini and Mankapur (all in Uttar Pradesh), Palakkad (Kerala) and Srinagar (Jammu and Kashmir).

The issued and subscribed equity capital of the company as on December 31, 2017 stood at Rs 760 crore.