New Delhi: An inter-ministerial panel on Tuesday deferred government's 9.33 per cent stake sale in the state-owned trading company MMTC on concerns over valuation of the company's equity.
"MMTC issue has been deferred for now... EGoM did not accept recommendations of merchant bankers on valuation issues," Disinvestment Secretary Ravi Mathur told reporters after the meeting. The issue was originally planned to hit the markets on March 14.
Mathur, however, did not say as to when the EGoM would meet next to decide on the MMTC stake sale. According to sources, the sale is likely to be shifted to the next financial year, 2013-14, which begins on April 1.
The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram was slated to decided on the base price of the MMTC stake sale. Shares of MMTC were trading at Rs 312.50 apiece on the BSE, up 5.41 per cent over previous close.
Government had shortlisted three merchant bankers for selling over 9.33 crore shares or 9.33 per cent of its stake in MMTC in the current fiscal through an Offer For Sale (OFS).
Since the public float of the company is very less, sources said the merchant bankers had a tough time in evaluating the share sale price which will be acceptable to investors. The government was expecting to raise Rs 250-300 crore through the stake sale.
The Department of Disinvestment (DoD) has shortlisted three investment bankers - Avendus, IDBI Capital Market Services and IDFC - to manage the stake sale of the PSU. The stake sale would have enabled the company meet minimum 10 per cent public holding norm stipulated by market regulator Sebi.
The DoD has initiated the process of investor meet for selling shares in the 'Miniratna' PSU, whose current public float is very less and hence the market valuation is too high. The roadshows for the stake sale were held in Mumbai and Pune. Of its shareholding of 99.33 per cent in MMTC, the government
is considering divesting 9.33 per cent paid up equity share capital.
The market capitalisation of the company is Rs 28,600 crore, of which the public free float is worth about Rs 1,430 crore. MMTC stake sale this fiscal would have helped the government inch towards Rs 24,000 crore disinvestment target as per revised estimates, lower than Rs 30,000 crore as estimated in budget for 2012-13.