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New PSUs will replace GAIL, EIL, CONCOR in the ETF basket

GAIL, EIL and CONCOR are set to be replaced with three other PSUs in the CPSEs Exchange Traded Fund (ETF) because the government’s holding in these companies has fallen below 55 percent

New PSUs will replace GAIL, EIL, CONCOR in the ETF basket

New Delhi: Three key public sector undertakings (PSUs) — Gas Authority of India Limited (GAIL), Engineers India Ltd (EIL) and Container Corporation — are set to be replaced with three other PSUs in the Central Public Sector Enterprise (CPSE) Exchange Traded Fund (ETF) because the government’s holding in these companies has fallen below 55 percent.

Sources in the Ministry of Finance said that three or more PSUs would be included in the list to replace GAIL, EIL and Container Corp and the number would depend upon the value of the scrip and the corresponding weightage in the ETF basket. The CPSE ETF functions like a mutual fund scheme comprises scrips of 10 bluechip PSUs, namely ONGC, Coal India, IOC, Oil India, PFC, Bharat Electronics, REC, GAIL, EIL and Container Corporation of India. While GAIL has a weightage of 11.25 percent, Container Corp and EIL account for 5.08 percent and 2.28 percent, respectively.
The CPSE ETF functions like a mutual fund scheme, comprises scrips of 10 bluechip PSUs, namely ONGC, Coal India, IOC, Oil India, PFC, Bharat Electronics, REC, GAIL, EIL and Container Corporation of India. While GAIL has a weightage of 11.25 percent, Container Corp and EIL account for 5.08 percent and 2.28 percent, respectively

The ETF was established in 2014 and the government has so far sold stakes in the 10 PSUs in three tranches to raise Rs 11,500 crore. Post the stake sale, the government holds 53.34 percent in GAIL, 54.80 percent in Container Corp and 52.02 percent in EIL. According to the rulebook, the stake sales can take place till the government holding in the 10 constituent companies reaches 55 percent. As the government holding in these three PSUs has fallen below 55 percent, they need to be replaced with new scrips.

An official working with the ministry said that ICICI Securities has been appointed as an adviser for the fourth tranche of the ETF, which will be launched once the basket is reconstituted. A final call on the matter will be taken by the inter-ministerial panel, chaired by Finance Minister Arun Jaitley. The three tranches of stake sale has yielded a total of Rs 11,500 crore — 3,000 crore from the first tranche in March 2014, 6,000 crore from the second in January 2017 and 2,500 crore from the third in March 2017. The stake sale is part of the government’s efforts to raise Rs 80,000 crore through disinvestment in the current fiscal.