Shares of Minerals and Metals Trading Corporation (MMTC) on Thursday tanked nearly 10 per cent on the BSE in early trade as government’s 9.33 per cent stake sale of the firm commenced on the bourses.
The floor, or the minimum offer price for MMTC’s share sale has been set at Rs. 60 apiece.
Soon after the commencement of the stake sale, the scrip hit a low of Rs. 190.35, down 9.98 per cent, or Rs. 21.10 apiece over previous close on the BSE within minutes of commencing of trade.
On the National Stock Exchange, MMTC fell 10 per cent to Rs. 189.05 a piece. The plunge triggered the lower circuit limit for the scrip on both the exchanges.
At the floor price of Rs. 60 apiece, a 9.33 per cent stake sale in MMTC could garner over Rs. 560 crore to the exchequer.
The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P. Chidambaram, on Wednesday cleared the 9.33 crore shares, or 9.33 per cent, stake sale of the trading giant through the Offer For Sale (OFS) route.
MMTC disinvestment would be the first stake sale of the government in the current fiscal. The government aims to raise Rs. 40,000 crore from PSU stake sale in 2013-14.
There is a huge difference between the floor price and the market price of MMTC as the scrip is illiquid, an official in Disinvestment Department said.
The government currently holds 99.33 per cent stake in State-run trading giant and the stake sale would help the company to meet SEBI’s minimum public shareholding norm.
The stake sale, which was originally slated to take place in March, was deferred on valuation concerns.
In the 2012-13 fiscal, MMTC reported a loss of Rs. 70.62 crore, due to 57 per cent decline in total revenues during the period as compared to previous fiscal. The company had reported a profit of Rs. 70.72 crore in 2011-12.
The DoD had shortlisted three investment bankers — Avendus, IDBI Capital Market Services and IDFC — to manage the stake sale of MMTC.