The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved the following proposal of Department of Telecommunication regarding transfer of shares by M/s ITI Limited to Special National Investment Fund (SNIF) to meet Securities and Exchange Board of India's minimum public shareholding requirement:
a) M/s ITI Limited will be allowed to transfer the requisite number of shares from President of India to SNIF as and when Capital grant is released in the form of equity infusion to M/s ITI Limited as part of revival plan approved by Cabinet in Feb, 2014 to meet for SEBI's minimum 10% Public Shareholding requirement;
b) M/s ITI Limited will be allowed to meet SEBI's requirement of minimum 25% public shareholding by August 2017.
Background:
M/s ITI Ltd., a Public Sector Undertaking under the Ministry of Communications & IT, Department of Telecommunications (DoT) has incurred accumulated losses to the tune of ₹ 5,166 crore as on 31.03.2015.
The financial position of M/s. ITI is not very sound. CCEA in its meeting held in February, 2014 approved the proposal to provide financial assistance of ₹ 4156.79 crore for revival of M/s ITI Limited.
An amount of ₹ 192 crore was provided to M/s ITI Limited during 2014-15 for meeting its CAPEX requirements for implementing revival plan. With this equity infusion, Government of India Shareholding will go beyond 90%.
In order to fulfil SEBIs requirement of minimum public shareholding for listed companies, equity stake of Government will have to be disinvested to bring its stake back to 90%. Apart from this, ITI will also be required to comply with SEBI's requirement of minimum 25% public shareholding by August 2017. However, M/s ITI Limited is currently a sick company and, therefore, may not get proper valuation if it is disinvested at this stage. It is hoped that with the implementation of revival plan, the company's position will improve and the value of the shares of the company may also increase.
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