Govt to list all profit making PSUs in 2-3 years
New Delhi: With just six public sector units (PSUs) listed in eight years, the government plans to fix strict timelines for all profit-making, large and medium sized state-owned firms to launch initial public offerings (IPOs) and list on stock exchanges.
The government is very clear in its approach of getting all profit making central public sector enterprises (CPSEs) listed in a time-bound manner to open them up for public scrutiny and higher transparency, department of investment and public asset management (DIPAM) secretary Neeraj Gupta told PTI in an interview.
Towards this end, he said, CPSEs should set their house in order by meeting all listing requirements like audited accounts for last three years and fully constituted board with requisite number of independent directors. Although he did not indicate the time-frame the government is looking at for listing them, another senior official said the process “should not take more than one to two years, at max, three years”.
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The Union Budget 2017-18 has given a clear “focus and direction” to listing of CPSEs, said the secretary, department of investment and public asset management which was earlier known as department of disinvestment, “Profit making large and medium sized CPSEs—no point listing small CPSEs—should list. They should open up for public scrutiny and higher transparency. They should compete in the market and establish themselves for whatever worth they can command in the market,” he said.
In the process, they will have access to the capital market for expansion of business activity and not rely merely on their own resources, which is government investment, he said. “This policy clearly indicates that government has the intention to complete these processes in a time bound manner,” he said, adding that the listing process has two parts—internal process and the actual transaction i.e. initial public offering and listing.
The administrative ministries, he said, will have to shoulder responsibilities in getting the companies ready for listing, which has to be done “prudently and at the right time”. The CPSEs to be listed would be selected based on their turnover, profitability and net worth thresholds, guidelines for which will be issued shortly, he said.
“Time bound means what should be a reasonable time-frame for creating a draft red herring prospectus (DRHP)... Once the books of accounts have been audited and approved how much time should they take in filing a DRHP? 6 months?.... Some time-frame would be stipulated after discussing with everyone,” he said.