Date:28/08/2005 URL: http://www.thehindubusinessline.com/2005/08/28/stories/2005082801730100.htm

Back New norms on public holding: MNC firms may be most hit

Suresh Krishnamurthy

Chennai , Aug. 27

NEW norms requiring minimum public holding of 25 per cent may affect firms that tried to delist but only succeeded in enhancing their stake beyond 75 per cent.

The requirement of reverse book building, which increases the price at which the stake of non-promoters can be bought, has made delisting difficult. Now, if these firms are unsuccessful in their attempt to delist, they would be forced to offload their holdings to the public.

Specifically, companies such as Astrazeneca Pharma, Atlas Copco, Kennametal Widia, Syngenta India and Wartsila India may be most affected by the new norms. Promoter's stake in these firms has exceeded 75 per cent because of tender offers made in the past.

Companies such as Sterlite Industries that went to great lengths to enhance promoter holding will also be affected by the new norms.

The number of listed companies that are affected by the new norms is high at about 500. The value of stake to be offloaded, however, exceeds Rs 100 crore only in the case of 14 companies.

Among Indian-owned firms, the value of stake to be offloaded is relatively high in the case of Wipro and DSP Merrill Lynch Investment Managers. The case of MRPL, now majority-owned by ONGC, will also require attention. If it is treated as a public sector company, the new norms will not affect it. For companies such as MRPL and Ambuja Cement Eastern, merger with a group or holding company may help them wriggle out of the situation.

Public holding is also low in the case of TCS and Jet Airways. They will, however, get more time to comply with the norms. If Jet Airways is treated as an infrastructure company, then the new norms will not be applicable and low public holding will continue.