MMTC which had launched its OFS for 933.12 lac shares at a floor price of Rs 60 was subscribed. The issue received bids for 358.74 lac shares from non-institutional investors and 1083.86 lac shares from institutional investors. The total bids received were for 1442.61 lac shares and the issue was subscribed 1.54 times. The indicative price was Rs 60.86. The government at this price would garner Rs 568 crs.

The share price of MMTC was locked circuit down at Rs 190.35 down 10% yesterday. Today also the shares are locked circuit down 10% at Rs 171.35. The gap between the floor price and the market price is Roughly Rs 111 and it would take roughly 20 trading sessions of getting locked down 5% each day to match.

A question being asked is whether government panicked in fixing the price at a discount over slightly over 70% or wanted to kick start the divestment? The answer lies somewhere in between as the company has not been doing much in recent years. The company reported a net loss for the year ended March 2013, its revenues for the year have become less than half and gone are the dyas when one had to go to a canalising agency for foreign trade. Today foreign trade is a prerogative of everyone and just about anyone can import or export.

Having some 10 odd companies to divest in the next two months to complete the minimum public shareholding norm to be met, it makes sense to start as early. In any case the subscription pattern of MMTC clearly indicates that the shares applied for were largely by LIC and PSU banks. It would be fair to assume that anywhere between 2/3rd to 3/4th of the issue size has been subscribed by these entities.

One more divestment, one more bailout and this would continue to be the story. One remembers the previous divestments of Hindustan Copper and NMDC and their current market price.