Promoters sell stake in Dish TV

The promoters of Dish TV today sold over 5.5 crore shares at Rs 49 per share.

Jawahar Goel, managing director, Dish TV, said: "Promoters have ofloaded 55mn shares at Rs 49..this money has to come back to the company because we had the rights issue last year..." The promoter shareholding has now declined to 52.1%..

Rights Issue
51.81cr shares at Rs 22 per share
Issue to bring in Rs 1,139cr
promoters had underwritten the rights issue
Payment schedule of Rs 22
On application: Rs 6
Between 3-9 months of issue: Rs 8
Between 9-18 months: Rs 8

Govt may dilute stake in listed PSUs to 90%

The Union finance ministry is examining a proposal that seeks to dilute the government's stake in all listed public sector undertakings to at least 90 per cent.

The proposal is an offshoot of the government thinking that there is no need for a big-bang approach to PSU disinvestment. In fact, the new government's agenda for action, finalised by the Cabinet secretariat, had recommended that public sector disinvestment should take place in small doses.

There are about a dozen listed public sector undertakings (PSUs) in which the government's stake is between 90 and 99 per cent. However, given the current buoyancy in stock market prices, the government could raise more than Rs 25,000 crore if it offloaded up to 10 per cent stakes held in these PSUs, a senior finance ministry official said.

The official's estimate of disinvestment proceeds from these PSUs is conservative. At current stock market prices, the government can mobilise around Rs 37,000 crore by selling up to 10 per cent in only the top ten PSUs in which it owns over 90 per cent.

The government's argument is that the Securities and Exchange Board of India's regulations stipulate that all listed companies must have a minimum floating stock of 10 per cent of total equity. The proposed disinvestment in these dozen-odd companies could also be justified as a requirement under Sebi regulations, the official said. Also, disinvestment up to 10 per cent in listed PSUs are least likely to cause any controversy or provoke political opposition.

The dilution of stakes in such PSUs will be one of the major initiatives of the new disinvestment policy expected to be announced in the Union Budget for 2009-10 in the first week of July. The policy will outline the government's blueprint for disinvestment and closure of sick and unviable PSUs.

WHAT'S AT STAKE
Company	Total outstanding In shares (mn)	Govt stake		Disinvested shares (in million)	Price per share (in Rs) on Jun 3
		in %	in shares (mn)
Hindustan Copper	925.22	99.59	921.42	3.79	270.70
MMTC	50.00	99.33	49.67	0.34	28271.15
HMT	760.35	98.88	751.83	8.52	74.34
NMDC	3964.72	98.38	3900.49	64.23	412.00
FACT	354.77	98.11	348.07	6.71	52.45
National Fertilisers	490.58	97.64	479.00	11.58	79.65
Scooters India	42.99	95.38	41.01	1.99	25.05
Andrew Yule & Co	296.33	94.42	279.79	16.54	56.30
Neyveli Lignite	1677.71	93.56	1569.67	108.04	136.60
ITI	288.00	92.98	267.78	20.22	41.15
RCF	551.69	92.50	510.31	41.38	81.59
STC India	60.00	91.02	54.61	5.39	366.45
Shareholding pattern as on 31st March 2009 Source: Business Standard Research Bureau Current disinvested equity calculated on total outstanding shares minus government stake

Internal discussions within the finance ministry on the broad contours of the disinvestment policy have still not concluded. A general consensus, however, has been reached on the proposal to allow listed and unlisted PSUs to tap the capital market to meet their funds requirements, as long as the total government equity in these does not fall below 51 per cent.

One of the issues on which no clarity has emerged is the manner in which the unlisted PSUs will be allowed to tap the capital market with an initial public offer. A section within the ministry is of the view that allowing unlisted PSUs to tap the capital market would not necessarily result in any proceeds for the central exchequer and not help meet the government's fiscal deficit. Hence, such IPOs should be structured in a manner that will enable the government to also divest its stake and mobilise resources to reduce the fiscal deficit.

A contrary view in the ministry is that PSU disinvestment should not be used as an instrument to meet the government fiscal deficit. Instead, it should be used to subject the PSUs to market discipline so that its management can measure its performance through the yardstick of its stock valuation in the open market. Such a view also supports more listed PSUs to float new stock to raise resources from a reviving stock market.

Disinvestment of government equity in PSUs has become an important agenda item for the Budget team in the finance minister after the strong endorsement it received from several industrialists who met Finance Minister Pranab Mukherjee two days ago during a pre-Budget meeting. These industrialists had argued that the finance minister should allow the PSUs to tap the capital market to meet their individual funds requirement for expansion plans.

Promoters hike stakes in 2 out of 5 cos in 2008-09

BL Research Bureau When the foreign institutional investors were busy selling in the equity markets for the better part of last year, promoters weren't exactly sitting idle.

A study on S & P CNX 500 companies indicates that two out of every five companies have witnessed an increase in promoter holding over the year ended March 2009. Equity holdings as of March 2009 are available for 484 of the CNX 500 companies.

Making use of offers

It has not always been open market purchases. More often than not such increases in promoters' stake have come about through rights offers where they ended up subscribing to shares of entitlements surrendered by other shareholders.

Take the instances of Hindalco and Tata Motors. Promoters ended up increasing their holdings from 31 per cent to 36 per cent and 33 per cent to 47 per cent respectively, to ensure that the rights issue was fully subscribed.

A number of open offers that came through in this period also increased the promoter holding, especially the stakes held by foreign promoters.

Ranbaxy-Daiichi Sankyo and UTV-Walt Disney are two such prominent open offers where foreign promoters increased their shareholding to obtain controlling majority in the companies.

Japanese pharma major Daiichi Sankyo, increased its stake to 64 per cent by way of open offer after acquiring the 34 per cent share holding from Ranbaxy's promoters.

In the case of Walt Disney, it held 32 per cent equity interest in UTV Software as of March 2008.

Through the open offer route, the former increased its interest to about 51 per cent in the latter.

Most promoters took full advantage of the sharp decline in share prices witnessed in 2008.

Price advantage

They increased stakes in their companies, when the prices were tumbling down and in a sense this instilled some faith in the investors, as well as helped the stock prices recover from their respective lows!

Promoters of Mahindra and Mahindra steadily pumped up their holdings from 22 per cent to 29 per cent between April 2008 and March 2009, when its share price plummeted from Rs 695 to Rs 383 in this period.

This exercise is evident even in cases of Essar Shipping, Era Infrastructure, Zandu Pharma and Gitanjali Gems, where promoters hiked their holdings by about 20-30 per cent, constantly throughout the year.

Reducing stakes

However, the period also promoters' shareholding decline in 128 companies.

From Rs 116, in October 2008 Unitech's prices declined to Rs 34 by March 31, 2009 as promoters offloaded their stake to mitigate the liquidity crunch.

Companies such as Akruti City, Fortis Healthcare and Reliance Power have also witnessed 5-10 per cent decline in promoter stakes.

Promoters' holdings appear to have stabilised during February and March 2009, which coincided with the abatement of the relentless fall in stock prices witnessed till then