Even as the deadline ended on Monday, several companies, where the promoters’ shareholding is 75 per cent and above, are yet to comply with the minimum public shareholding norms (MPS). The market regulator, Securities and Exchange Board of India (SEBI), had mandated that by June 3, 2013, companies, where promoters held over 75 per cent, should dilute their stake to keep the minimum public shareholding at 25 per cent.

On June 3, when the deadline ended, most of the companies informed the bourses that they have successfully diluted the promoters’ stake to 75 per cent and below.

Nine companies, including Tata Communications, hit the market with offers to sell shares worth over Rs.450 crore on Monday. However, they remained under-subscribed till afternoon. Essar Ports, BGR Energy Systems, Omaxe, Kartik Investment Trust, Lords Chloro Alkali, Marathwada Refractories, Rama Phosphates and Balashri Commercial were the other companies to hit the market on Monday.

From March 1, 2012, to May 31, 2013, nearly 50 corporates used the offer for sale (OFS) route, nine went through institutional placement programme (IPP) option and a few used the bonus issue route to reduce their holdings. For instance, Gammon Infra opted for the bonus issue route with the promoters foregoing their bonus entitlement. Wipro opted for the restructuring and demerger route with approval from the market regulator.

Many companies received poor response to their OFS programmes in the last one month. For instance, Tata Teleservices’ OFS of 5.16 crore shares with a floor price of Rs.8.90 per share on May 17 was cancelled due to poor response. It made another OFS on May 30 with 3.50 crore shares at a reduced floor price of Rs.7.60.

The response was poor again. However, companies with sound fundamentals were able to get good response to their offers and succeeded in reducing their promoters’ stake.

It is estimated that shares worth $9 billion would have been offloaded over the last one year. The moot question now is: Will the regulator take action against those companies which failed to comply with the norms? However, some companies got extension of time through appeals with SEBI or by moving the Securities Appellate Tribunal (SAT). For example, Gillette India got an interim relief from complying with the MPS norms as the SAT granted a stay on SEBI’s rejection of Gillette’s proposal for a change in shareholding structure. There are 12 public sector enterprises which have 90 per cent government holdings. These companies are required to offload shares to comply with SEBI’s guidelines by August.

Analysts say that the stock market does not have the appetite to absorb share sales of a sizable volume offered by the promoters.