It is not right time for listing of PSUs: DPE secretary

Due to the volatility in the stock market triggered by global and domestic factors the government has managed to mop up only Rs1,145 crore through disinvestment of PSUs against the target of Rs40,000 crore for the current fiscal

New Delhi: The government, which has ambitious disinvestment as well listing plans for profit making PSUs, on Tuesday said it is not the right time to hit the market, reports PTI.

Due to the volatility in the stock market triggered by global and domestic factors the government has managed to mop up only Rs1,145 crore through disinvestment of PSUs against the target of Rs40,000 crore for the current fiscal.

“Probably today is a bad time, but tomorrow might be a good day,” Department of Public Enterprises secretary DRS Chaudhary said when asked if it is the right time to list public sector enterprises.

He was talking to reporters on the sidelines of a CII function here.

As per the government disinvestment policy, all unlisted CPSEs with no accumulated losses and having earned net profit in the three preceding years are to be listed.

Mr Chaudhary, however, said that PSUs have a great potential and if more such firms are listed, their total market capitalisation could account for over 50% of total m-cap of all listed companies on the BSE.

“With (listing of) another 50 central public sector enterprises and state-level public sector enterprises (SLPEs) listed on stock exchange, their market capitalisation could go up to 50% which would be similar to PSUs share in China and Malaysia” he said.

At present, about 50 PSUs, including SAIL and CIL, account for 26.23% of the total market capitalisation of listed companies on the BSE.

Mr Chaudhary said the share of investments by PSUs in the country’s gross domestic product (GDP) stood at 8.4% in 2009-10, whereas private firms’ investments stood at 22.3%.

During the 12th Five Year Plan (2012-17), the PSUs are expected to increase their share of investments in India's GDP to 9.1%, while it may be 24% for private companies, Mr Chaudhary said.

Total net profit of all CPSEs went up from Rs5.87 lakh crore in 2008-09 to Rs6.6 lakh crore in 2009-10, registering a growth of 12.42%, according to the government data.

There are 249 CPSEs with a total investment Rs5.8 lakh crore the end of 31 March 2010.

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Lock-in period for FIIs in infra bonds may be cut to one year

As per RBI’s recently liberalised the norms SEBI-registered FIIs are also allowed to invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as ‘Infrastructure Finance Companies’ (IFCs) by the RBI, within the overall limit of $25 billion

New Delhi: With a view to attracting more foreign funds into the economy, the government is weighing the pros and cons of reducing the lock-in period of long-term infrastructure bonds for foreign institutional investors (FIIs) to one year, reports PTI.

“India is toying with the idea of reducing lock-in period of long-term infra bond for FIIs from three years to one year,” a senior finance ministry official said.

The Reserve Bank of India (RBI) had recently liberalised the norms allowing FIIs to invest up to $25 billion, up from the earlier limit of $5 billion, in bonds and debentures of Indian infrastructure companies.

FIIs registered with the Securities and Exchange Board of India (SEBI) were also allowed to invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as ‘Infrastructure Finance Companies’ (IFCs) by the RBI, within the overall limit of $25 billion.

However, this is subject to conditions that such instruments shall have a residual maturity of five years or above and the investments would have a lock-in-period of three years.

This lock-in-period is computed from the time of first purchase by FIIs.

The official said if the lock-in period is reduced, FIIs will find it more attractive to invest in such bonds.

To channelize savings for development of infrastructure sector, the government in 2010-11 introduced the concept of long-term tax savings bond. It provides tax exemption on investments up to Rs20,000 in long-term infrastructure bonds.

This is over and above the existing tax saving limit of Rs1 lakh.

The government proposes to double investment in infrastructure to $1 trillion during the 12th Five Year Plan (2012-17).

A host of companies like IFCI, REC and IDFC had raised about Rs8,000 crore through issue of tax-savings infra bonds in the last fiscal.

Foreign funds withdrew over Rs3,200 crore from the Indian securities market in November amid concerns over the worsening debt crisis in the euro zone.

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Guidelines regulating role of advisers soon: SEBI

SEBI, which had put up a discussion paper on the role of investment advisors, has received detailed feedback.  The market regulator is set to announce norms for regulating these entities soon

New Delhi: Capital market regulator Securities and Exchange Board of India (SEBI) on Tuesday said it will soon come out with norms for regulating the role of investment advisors, reports PTI.

“We have received a very detailed feedback and we are undergoing a process of discussion and shortly we will come out with regulations (on investment advisers),” SEBI whole-time member Prashant Saran said here.

“It is very difficult to give a time-line. We do need to build a consensus,” he said on the sidelines of an Assocham event here.

In September this year, SEBI had proposed to bar investment advisers from acting as agents for promoting financial products.

The entities, which include banks and fund managers, would have to be registered with a self-regulatory organisation (SRO) as investment advisers, said the concept paper on Regulation of Investment Adviser issued SEBI.

“No financial incentives/consideration would be received from any person other than investors seeking advice. In case of advice regarding investment in entities related to the investment adviser, adequate disclosures shall be made to investor regarding the relationship,” the paper had said.

It had said, “The person who interfaces with the customer should declare upfront whether he is a financial adviser or an agent of the manufacturer.”

Mr Saran said mutual funds must increase their penetration in smaller cities and rural areas while financial literacy should spread among the uneducated also.

The focus should be on small investors so that the base widens. Financial education should be sector-specific and product-neutral, he said.

Most of the money parked in mutual funds comes from institutional investors which include corporates, banks and foreign institutional investors (FIIs).

Many financial products are becoming complicated and it is not easy for even an educated person to understand and analyse them, he said.

At the same time, Mr Saran said financial structures across the world do not command as much respect as they used to in the past.

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