With just six public sector units (PSUs) listed in eight years, the government is planning to list all profitable large and medium sized state-owned firms and also fix strict timelines for unlocking their value.
According to Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta, the government was 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.
In the Union Budget 2017-18, the Centre had given a clear indication and is focused on the CPSEs' listing. The move is beneficial to the CPSEs as they will benefit from the proceedings of the listing.
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.
"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," the secretary said.
In the process, they will have access to 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 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 (IPO) 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? Six months?.... Some time-frame would be stipulated after discussing with everyone," he said.