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June 8, 2001
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Money > Business Headlines > Report June 8, 2001 |
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Government plans to offload 5 per cent in MTNL before divestmentP Vaidyanathan Iyer & Thomas K Thomas The government will bring down its stake in Mahanagar Telephone Nigam Ltd from the present 56 per cent to 51 per cent by the end of the current financial year. Senior government officials said that offloading of the 5 per cent stake would take place before the telecom PSU was divested. The company is slated for divestment before the end of the current fiscal. "While a part of the 5 per cent stake would be picked up by an Indian financial institutions, the balance will be earmarked for the employees stock option plan," a top official said. The Rs 51.82 billion company recorded a net profit of Rs 1.87 billion for the year-ended March 2000 with a paid-up capital of Rs 6.30 billion. Five per cent of the paid-up capital translates to 31.5 million shares of Rs 10 face value each. While the government holds 56 per cent stake in the state-owned telecom major, GDRs account for 11 per cent, foreign institutional investors and non-resident Indians hold 14 per cent and the balance is held by domestic investors. According to officials, the company's ESOP plan is currently stuck with the employees seeking a downward revision in the price to the level at which stocks were offered to them earlier. The employees at present are offered options at Rs 146 per share. However, the employee's union is demanding that the options be granted at Rs 60 per share, the level decided at the time when the decision to grant ESOPs was taken. To resolve the issue, officials said, a committee had been formed which would look at the pricing issue and get back to the government with its report. The company plans to offer ESOPs amounting to about 3 per cent of its paid-up capital. Officials say the company has completed all the formalities required for converting its GDRs into ADRs and is awaiting a formal nod from the Securities and Exchange Commission, USA. The PSU is slated for divestment this year when the government will bring down its stake in the company to 26 per cent. Unlike VSNL, where the 49 per cent FDI cap deterred foreign telecom players from bidding, MTNL's sale is not likely to raise any such problem since the GDR portion of MTNL is just 11 per cent compared to VSNL's 30.4 per cent. Powered by YOU MAY ALSO WANT TO READ:
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