PGCIL share allotment

A preliminary study of the Demand & Basis of Allotment of PGCIL shares makes an interesting case study from the view of the Basis of allotment of employees quota.

Here is a case of over subscription of the employee quota by 3,18 times and some of the employees have been denied FIRM allotment even though they have subscribed to the reserved quota. The shares available for allotment under the employees quota totals up to Rs. 72. 68 crores which has been subscribed for Rs.231.78 Crores. Given the fact that the EMPLOYEE quota no longer has the restriction of Lock in period, the overwhelming response needs to be discounted for the possibility of proxy subscription.

Under such circumstances, is the basis of allotment justified, in as much as it has denied original allotment to some genuine employees, while making allotment on a proportionate basis to the level of interest shown. It is a different factor that such employees can now definitely buy these shares from the market at a premium(more than 75% as per Grey market indications).

In my opinion this basis of allotment is flawed as it ignores the fact that all employees are to be treated equal. We need to therefore ensure that

• Minimum shares based on market lot considerations need to be allotted to all those who have applied for under the quota and
  
• Full allotment of the applied shares are alloted to the maximum number of persons with out denying anybody allotment.

Such defined steps need to be followed to ensure a fair distribution. While, one does not see any foul play, it will be necessary for the management representatives (who are likely to be the main beneficiaries of this largesse) to be more proactive and ensure that the lower rung employees are not denied their chance of securing rightful ownership.