A Tamil Nadu Government team will meet officials of the Centre and the Securities and Exchange Board of India (SEBI) in Mumbai on Monday to finalise modalities for the State to acquire the proposed five per cent divestment in Neyveli Lignite Corporation (NLC).
Stating this, Chief Minister Jayalalithaa, in a letter to Prime Minister Manmohan Singh on Saturday, said she expected details of the structuring and execution of the transaction to be finalised at the meeting.
This would be a positive development, “which I am confident would enable an early resolution of the labour unrest in Neyveli,” she said.
She was replying to a letter Mr. Singh had written on Friday requesting her to nominate a senior officer to coordinate with the Department of Disinvestment and SEBI so that the minimum public shareholding requirement under the Securities Contract (Regulation) Rules, 1957, could be complied with by August 8.
(The Prime Minister said her suggestion of Tamil Nadu State PSUs purchasing the five per cent stake to be divested in NLC was discussed with SEBI. The market regulator in turn had stated that the possibility exists for a state industrial development corporation to participate in an institutional placement programme, possibly with some preference).
The Secretary, Disinvestment, had written to the Chief Secretary on July 6 requesting for nominating of a nodal officer, Ms. Jayalalithaa said, adding on her direction the Principal Secretary, Finance Department, was made the nodal officer.
On July 10, a team comprising the Principal Secretary, Finance; Principal Secretary, Planning and Development; and Joint Secretary, Industries held extensive discussions on various modalities with Secretary, Department of Disinvestment, in New Delhi.
It included identification of the State PSUs which are Qualified Institutional Buyers and eligible to participate in an Institutional Placement Programme (IPP) and the pricing formula and the time line for effecting the transaction.
Noting that the quantum of disinvestment was also discussed, the Chief Minister referred to her July 7 letter in which she said while the State PSUs would be prepared to buy the entire five per cent it would be adequate if only 3.56 per cent is offered for sale. This would do to meet the regulatory norm of 10 per cent public holding as 6.44 per cent of NLC’s equity is already with the public.
The Prime Minister, in his letter, had said the proposed five per cent disinvestment would neither lead to privatisation nor alter the public sector character of NLC.
“At present, the government of India shareholding is 93.56 per cent and the remaining 6.44 per cent shares are held by others. The public sector character of the company will not be affected at all as long as the government of India continues to hold more than 51 per cent of the shareholding in NLC. The fear that such a disinvestment would lead to privatisation is, therefore, unfounded and devoid of facts.”
