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Mint
04-06-2025
- Business
- Mint
Wanted: Independent directors for PSU boards. But where is the approval?
Mumbai: Over three-fourths of India's listed public sector enterprises do not have the requisite number of independent directors, as these companies continue to wait for clearance from various government departments. As many as 62 out of 79 listed PSUs lack the mandated number of independent directors, according to data from Prime Database. Despite repeated regulatory reminders, these companies await clearances from their respective ministries, delaying crucial appointments and inviting penalties from stock exchanges. Government-owned firms, including Hindustan Aeronautics Ltd, Indian Oil Corp. Ltd, Indian Railway Catering and Tourism Corp, State Bank of India, National Aluminium Company Ltd. and Steel Authority of India Ltd, did not have the minimum number of independent directors as of 2 June, according to Prime Database, a Mumbai-based market data tracking firm. The list of non-compliant PSUs includes banks, oil and gas companies, metals and mining firms, power utilities, telecommunications, railways, and engineering firms. According to the Securities and Exchange Board of India's listing regulations, at least one-third of a listed entity's board members must comprise independent directors. Additionally, if the chairman is an executive director, at least half of the board must consist of independent directors. Also Read: HPCL gets new chief, four more large PSUs in queue Boardroom bottlenecks There are more red flags when it comes to board committees: 64 PSUs lack an independent director as chairperson of their audit committee, and 68 companies do not have independent chairs for their nomination and remuneration panels. Additionally, 14 of the listed PSUs are yet to appoint a single woman director, despite gender diversity requirements, according to Prime Database. 'It's ironic that we are asking all private sector companies to comply with these requirements when government-owned companies themselves are non-compliant," said Pranav Haldea, managing director at Prime Database. With PSUs failing to comply with the market regulator's rules, many have been fined by stock exchanges. Last week, National Aluminium Company Ltd (Nalco) was fined ₹33.32 lakh for having only three independent directors—two short of the required five—on its 10-member board. A spokesperson for Nalco said the company was continuously following up with the ministry of mines, its administrative ministry, for the appointment of the requisite number of independent directors. The bottleneck lies in the approval process across various ministries, according to proxy advisory firms. 'The Prime Minister's Office should send a strong message to all concerned ministries and PSU companies that they need to be compliant, as non-compliance by PSUs doesn't send the right message to investors," said Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm. 'For instance, when the government, as a major shareholder, is involved in abusive transactions or there is trouble with key management, independent directors are the custodians of minority shareholders' interests," Subramanian said. Also Read: India's PSU banks outshine private peers in arresting bad loans Many of the largest money managers, including BlackRock and Vanguard, have voiced their concerns when these companies have sought shareholder approval for the appointment of directors, according to voting disclosures reviewed by Mint. In August last year, Hindustan Aeronautics sought shareholder approval for the appointment of former chairman C.B. Ananthakrishnan. Nearly a fourth of public institutions opposed the decision. 'Nominee serves as chair of the board and bears responsibility for lack of independence. Nominee is an executive director on the audit committee," noted BlackRock, the world's largest money manager, with $11.6 trillion in assets under management. In the same month, Hindustan Petroleum Corp. sought shareholders' approval for the appointment of Pankaj Kumar as a director, but 28.35% of public institutions, including Vanguard, opposed his re-appointment. Despite governance lapses, investor interest in PSUs has surged. The BSE PSU Index, which comprises 63 companies, has outperformed the Sensex over the last five years. The index has gained 301% between 5 June 2020 and 3 June 2025, while the Sensex has risen by 135.5% during this period.
Time of India
04-06-2025
- Business
- Time of India
Rs 43,000 crore selloff by promoters! Insider exits flash warning sign for Nifty bulls
Just as Nifty notched a hat-trick of monthly gains with a 12% surge through May, a parallel trend has emerged: India Inc's promoters are cashing out. In what could be viewed as a potential red flag for the ongoing market rally to accelerate further, promoters and other large shareholders have offloaded shares worth a staggering Rs 43,400 crore in May alone. This comes at a time when foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have together pumped in nearly Rs 80,000 crore into Indian equities last month, alongside steady retail and HNI buying. The sell-off, led by high-profile block deals, is raising eyebrows about insider sentiment, especially with valuations running high. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villa For Sale in Dubai Might Surprise You Villas in Dubai | Search ads Learn More Undo Topping the list is Rakesh Gangwal , co-founder of IndiGo , who sold shares worth over Rs 11,560 crore on May 27 in a fresh round of stake trimming in InterGlobe Aviation . A day later, British American Tobacco (BAT) offloaded a 2.5% stake in ITC through its subsidiary for around Rs 12,900 crore, one of the largest single-day exits in recent memory, shows data compiled from Prime Database. Earlier in the month, Singtel sold Bharti Airtel shares worth Rs 12,880 crore on May 16. Meanwhile, General Atlantic Singapore Fund exited KFin Technologies in a Rs 1,790 crore deal, and Sajjan Jindal Family Trust pared its stake in JSW Infrastructure for Rs 1,210 crore. Live Events Prime Database shows promoter selling activity also surfacing in smaller firms like Gravita India, PG Electroplast, TD Power, Paras Defence, and Ami Organics, fanning concerns among market watchers. Block deals continued this week as well with action seen in Zinka Logistics, Aptus Value Housing Finance, Yes Bank and Ola Electric on Tuesday. PE investor True North and others sold over $175 million worth of Niva Bupa Health Insurance shares on Monday. Siddharth Khemka of Motilal Oswal Financial Services pointed to liquidity dynamics behind the move. 'If FIIs want to buy, and DIIs and retail don't want to sell, then who provides supply? The promoters are stepping in. They want liquidity – they can't call up individual investors to offload 3% blocks. When institutional money is present, that's when promoter selling comes into play,' he said, adding that block deals and IPOs are likely to surge again as markets stabilize. Also read | India crowned top destination for stock compounders, says BofA; lists 9 structural themes Anshul Saigal, founder of Saigal Capital, cautioned against over-interpreting promoter sales. 'There can be multiple reasons to sell – like the Whirlpool case where the parent is in distress. I pay less attention to promoter sales and more to purchases. There's only one reason to buy – the belief that the stock will go up.' However, Sandip Sabharwal, market expert, flagged a possible contradiction. 'If companies are guiding for strong growth but promoters are dumping large volumes at high valuations, that's a dichotomy. It raises questions. I'm more concerned about small and midcap promoter sales than the larger ones like InterGlobe or BAT's sale in ITC. But even large-cap exits pull liquidity from the system and cap market upside.' While the promoter exit wave may be driven by individual circumstances – ranging from global financial pressures to portfolio rebalancing – the timing is unmistakable. As the market roars ahead, insiders are cashing in. Whether it's a canary in the coal mine or just business as usual remains to be seen, but for now, Nifty bulls may want to tread with a touch more caution. Also read | Rs 15 lakh crore in net profit! India Inc's top 500 cos break records in FY25 despite downgrades ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Mint
03-06-2025
- Business
- Mint
Investors line up four block deals worth ₹3,480 crore on 4 June
Institutional investors have lined up four block deals worth nearly ₹ 3,500 crore on June 4, according to term sheets, as they look to take advantage of the rebound in the Indian equity market. The investors plan to sell stakes in Indegene Ltd, Tata Technologies Ltd, Alkem Laboratories Ltd and Aditya Birla Fashions Ltd, the terms reviewed by Mint show. Jayanti Sinha, part of the promoter group, is looking sell 2.9% stake in Alkem Laboratories ( ₹ 825 crore); CA Dawn Investments, vehicle for global PE firm Carlyle, is offloading 10.2% in Indegene ( ₹ 1,420 crore); TPG Rise is exiting its entire 2% in Tata Technologies ( ₹ 635 crore); and Flipkart is selling around 6% stake in Aditya Birla Fashion and Retail ( ₹ 600 crore), according to the terms. The deals are likely to be completed on 4 June 4. 'The sellers want to take advantage of the market conditions and, given the depth of the equity markets, they are confident of finding buyers,' said an investment banker involved in one of these deals. While Axis Capital is advising Sinha, Bank of America is advising TPG. Goldman Sachs is helping Flipkart and Kotak Securities and IIFL is advising Carlyle on the sale, the term sheets show. After a brief lull in the market towards the beginning of the year, investors and bankers are now seeing green shoots of activity in the equity capital markets. Ather Energy became the first company to exploit a window earlier this financial year to list on the exchanges. In just the first 15 days of May, investors executed 12 block deals worth ₹ 3,541.97 crore compared with only five deals aggregating ₹ 506.37 crore in April, Mint reported previously, citing data from Prime Database. The broader Nifty 50 closed 174 points or 0.7% lower at 24,542.50 points on Tuesday. But the benchmark index has rebounded 12.86% from its last low of 21,744 on 7 April this year. 'This (block deals) has been on account of a rebound in market sentiment and geopolitical de-escalation and supported by close to $3 billion in FII (foreign institutional investor) net inflows this quarter, along with steady DII (domestic institutional investors) participation, signaling renewed investor confidence," Gaurav Sood, managing director and head, equity capital markets at Avendus Capital, an investment banking firm, was quoted in the report. Some of the marquee block deals in May included Antfin selling 4% stake in Paytm; General Atlantic divesting 6.9% in KFin Technologies, and Singapore Telecommunications Ltd offloading 1% stake to Bharti Airtel.
Mint
03-06-2025
- Business
- Mint
Investors line up four block deals worth ₹3,480 crore on 4 June
Institutional investors have lined up four block deals worth nearly ₹ 3,500 crore on June 4, according to term sheets, as they look to take advantage of the rebound in the Indian equity market. The investors plan to sell stakes in Indegene Ltd, Tata Technologies Ltd, Alkem Laboratories Ltd and Aditya Birla Fashions Ltd, the terms reviewed by Mint show. Jayanti Sinha, part of the promoter group, is looking sell 2.9% stake in Alkem Laboratories ( ₹ 825 crore); CA Dawn Investments, vehicle for global PE firm Carlyle, is offloading 10.2% in Indegene ( ₹ 1,420 crore); TPG Rise is exiting its entire 2% in Tata Technologies ( ₹ 635 crore); and Flipkart is selling around 6% stake in Aditya Birla Fashion and Retail ( ₹ 600 crore), according to the terms. The deals are likely to be completed on 4 June 4. 'The sellers want to take advantage of the market conditions and, given the depth of the equity markets, they are confident of finding buyers,' said an investment banker involved in one of these deals. While Axis Capital is advising Sinha, Bank of America is advising TPG. Goldman Sachs is helping Flipkart and Kotak Securities and IIFL is advising Carlyle on the sale, the term sheets show. After a brief lull in the market towards the beginning of the year, investors and bankers are now seeing green shoots of activity in the equity capital markets. Ather Energy became the first company to exploit a window earlier this financial year to list on the exchanges. In just the first 15 days of May, investors executed 12 block deals worth ₹ 3,541.97 crore compared with only five deals aggregating ₹ 506.37 crore in April, Mint reported previously, citing data from Prime Database. The broader Nifty 50 closed 174 points or 0.7% lower at 24,542.50 points on Tuesday. But the benchmark index has rebounded 12.86% from its last low of 21,744 on 7 April this year. 'This (block deals) has been on account of a rebound in market sentiment and geopolitical de-escalation and supported by close to $3 billion in FII (foreign institutional investor) net inflows this quarter, along with steady DII (domestic institutional investors) participation, signaling renewed investor confidence," Gaurav Sood, managing director and head, equity capital markets at Avendus Capital, an investment banking firm, was quoted in the report. Some of the marquee block deals in May included Antfin selling 4% stake in Paytm; General Atlantic divesting 6.9% in KFin Technologies, and Singapore Telecommunications Ltd offloading 1% stake to Bharti Airtel. The expiry of lock-in periods for recently listed companies is expected to push more block trades into the market. Large investors may now look to encash stakes in startups and tech companies listed in 2023.
Mint
30-05-2025
- Business
- Mint
A loophole lets retail investors bid for some small-business IPOs
Regulations barring retail investors from the high-risk initial public offerings of tiny businesses have failed to prevent the category from participating in at least a few such issues. The reason: a loophole in the rules. National Stock Exchange and BSE Ltd, in consultation with the Securities and Exchange Board of India (Sebi), amended rules to raise the minimum bid for the IPOs of small and medium enterprises (SMEs) to more than ₹2 lakh for offers filed with the exchange after 8 March. The change in Regulation 267 of the Issue of Capital and Disclosure Requirements (ICDR) effectively prevents retail or small individual investors from such issues, since they cannot invest more than ₹2 lakh. However, IPOs approved before the 8 March cut-off can still offer small investors a chance to bid below ₹2 lakh. That's because exchanges give companies a window of one year from the date of approval to launch their maiden offer. Also read: Sebi's co-investment plan wins fund favour; lawyers warn of tax, legal cracks Unless the bourses issue circulars offering clarity, retail investors may be unable to participate in fresh SME IPOs but may be able to bid in older offers, according to analysts. 'A handful of SME IPOs that filed their prospectus before March 2025 are yet to open for subscription. These IPOs still allow applications for around ₹1 lakh to ₹1.2 lakh amounts that are significantly more accessible for individual investors," said Rohit Jain, managing partner at law firm Singhania & Co. 'However, it's a narrow window, as most of these IPOs are expected to hit the market in the next few weeks." Small firms whose IPO prospectuses were filed before the cut-off include 3B Films Ltd, LGT Business Connextions Ltd, Mahendra Relators and Infrastructure Ltd, and Everstims Technologies Ltd. 3B Films' offer, which is open for subscription from 30 May to 3 June, has received 177 applications from the retail category and is planning to raise ₹33.75 crore from the offer. Its minimum bid quantity is 3,000 shares, which means a minimum investment of ₹1,50,000 as the offer price is ₹50. Nikita Papers and Blue Water Logistics' offers, which closed on 29 May, also received bids from retail investors. Also read: IndiGo's promoter Rakesh Gangwal to sell $803 mn stake Around 348 companies have announced their intention to raise money on the SME platform, according to Prime Database. However, exchanges reveal the names of the companies launching offers a couple of days before an issue opens. Sebi rules Sebi tweaked the rules as retail participation surged in SME IPOs even as the regulator found cases involving misuse of proceeds and misconduct. Small businesses raised ₹9,120 crore through IPOs in FY25 against ₹5,971 crore in FY24, ₹2,235 crore in FY23, and ₹965 crore in FY22, according to data shared by Prime Database. That mirrors the record ₹1.62 trillion mop-up from the main board IPOs in FY25. Sebi regulates the mainboard IPOs, while exchanges oversee the SME segment in consultation with the regulator. 'We are still seeing DRHPs getting filed, which have a quota for retail applications. However, it will depend on the exchange to either accept or reject the retail quota," said a senior executive at an investment management firm, speaking on the condition of anonymity. The exchanges are said to be working to address this gap, according to a person aware of the development, who spoke on the condition of anonymity. Queries emailed to the NSE and BSE on this loophole remained unanswered. Retail investors were excluded from the IPO of NR Vandana Tex Industries Ltd., with a minimum bid amount of ₹2.44 lakh. The cotton textile company filed its red-herring prospectus on 21 May. Unlike the other SME IPO bids, the company's offer, which closed for subscription on Friday, received bids from 33,597 individual investors who are not retail investors. '…the rules (barring retail investors applying in SME IPOs) only apply to companies filing their prospectus after March 2025," Mohit Mehra, vice president of primary markets and payments at Zerodha, said in a post on X (formerly Twitter). 'Since prospectuses remain valid for a year, companies going public now may still allow retail participation if they filed before March 2025." Also read: Asset manager Abakkus plans mutual fund foray to ride retail demand Sebi, ahead of amending the rules, had cited increased retail participation in SME IPOs for its decision. 'Considering that SME IPOs tend to have a higher element of risks and investors getting stuck if sentiments change post listing, in order to protect the interest of smaller retail investors, the limit was increased," the regulator had said in a consultation released on 19 November. 'In recent times, instances have been observed of diversion of issue proceeds to related parties and shell companies and inflation of revenue was shown by circular transactions," Sebi had said.
